There's a trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments which are applied to the principal. You pay more on principal by employing various techniques. For many people,Perhaps the simplest way to keep track is by making 1 additional mortgage payment per year. However, many people will not be able to pull off such a large additional payment, so splitting an extra payment into twelve extra monthly payments works too. Finally, you can commit to paying half of your mortgage payment every two weeks. These options differ slightly in reducing the final payback amount and reducing payback length, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
Some folks can't manage extra payments. Remember that almost all mortgages will permit you to pay extra on your principal at any point during repayment. You can take advantage of this rule to pay extra on your mortgage principal any time you come into extra money.
If, for example, you receive an unexpected windfall just a few years into your mortgage, paying several thousand dollars into your mortgage principal will significantly shorten the duration of your loan and save enormously on interest paid over the life of the loan. Unless the mortgage loan is quite large, even small amounts applied early in the loan period can produce huge savings over the duration of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.