Here's a simple trick to reduce the repayment period of your mortgage and save thousands over the course of your loan: Make additional payments which are applied toward the principal. You pay extra on principal by employing various techniques. For many people,Perhaps the easiest way to keep track is by making 1 additional mortgage payment per year. But many folks won't be able to swing such a large additional payment, so dividing an additional payment into twelve additional monthly payments is a fine option too. Finally, you can commit to paying half of your mortgage payment every other week. Each option yields slightly different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. Remember that virtually all mortgages will permit you to make additional payments to your principal at any time. Any time you get some extra cash, consider using this provision to make an additional one-time payment toward mortgage principal.
If, for example, you receive a very large gift or tax refund just a few years into your mortgage, you could apply this money toward your mortgage loan principal, resulting in significant savings and a shorter payback period. Unless the loan is very large, even a few thousand dollars applied early can produce huge benefits over the duration of the loan.
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