There's a simple trick to significantly reduce the length of your mortgage and save thousands in interest: Make additional payments which apply to the principal. Borrowers can do this in several ways. Paying one additional full payment once per year is perhaps the easiest to keep track of. If you can't pay an extra whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can pay a half payment every other week. Each of these options yields different results, but each will significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. Remember that almost all mortgage contracts will allow you to pay extra on your principal at any time. Whenever you get some unexpected money, you can use this rule to make an additional one-time payment on mortgage principal.
If, for example, you were to receive a very large gift or tax refund three years into your mortgage, investing a few thousand dollars into your mortgage principal can reduce the repayment duration of your loan and save a huge amount on interest paid over the duration of the loan. Unless the mortgage loan is quite large, even small amounts applied early can yield huge savings over the life of the loan.
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