There's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make extra payments which are applied toward the principal. People employ various techniques to meet this goal. Making one additional full payment one time per year is probably the simplest to arrange. But many folks will not be able to afford this huge additional payment, so dividing an additional payment into twelve additional monthly payments works too. Another very popular option is to pay a half payment every other week. The result is you will make one extra monthly payment every year. Each option yields slightly different results, but each will significantly reduce the length of your mortgage and lower your total interest paid.
Some people can't manage extra payments. Keep in mind that almost all mortgage contracts will permit you to make additional payments to your principal at any time. Any time you get some extra money, you can use this rule to pay an additional one-time payment on your principal.
Here's an example: several years after buying your home, you receive a very large tax refund,a large legacy, or a non-taxable cash gift; , you could apply this windfall toward your mortgage loan principal, which would result in significant savings and a shorter payback period. Unless the mortgage loan is very large, even a few thousand dollars applied early in the loan period can produce huge benefits over the duration of the loan.
Do you have a question regarding a mortgage program?