Here's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make additional payments that go toward the principal. Borrowers can accomplish this in several ways. Paying a single extra payment once a year is perhaps the easiest to keep track of. However, some folks will not be able to afford this huge additional payment, so splitting one additional payment into twelve extra monthly payments is a great option too. Finally, you can commit to paying half of your mortgage payment every two weeks. Each option produces slightly different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. But you should remember that most mortgages will allow additional principal payments at any time. Any time you get some extra cash, consider using this provision to make a one-time additional payment on your principal.
Here's an example: five years after moving into your home, you get a larger than expected tax refund,a very large legacy, or a cash gift; , you could pay a portion of this money toward your mortgage loan principal, which would result in huge savings and a shorter payback period. Unless the mortgage loan is quite large, even modest amounts applied early can produce huge savings over the life of the loan.
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