There's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make extra payments that go toward the loan principal. Borrowers pay more on principal in various ways. Paying one additional full payment once every year is likely the simplest to track. If you can't afford to pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can commit to paying a half payment every other week. These options differ a little in reducing the total interest paid and shortening payback length, but they will all significantly shorten 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. But remember that most mortgage contracts will allow additional principal payments at any time. You can benefit from this provision to pay extra on your mortgage principal when you get some extra money.
Here's an example: several years after buying your home, you receive a larger than expected tax refund,a large legacy, or a cash gift; , investing a few thousand dollars into your home's principal can significantly reduce the repayment period of your loan and save a huge amount on interest over the duration of the loan. Unless the loan is very large, even a few thousand dollars applied early in the loan period can yield huge benefits over the life of the loan.
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