There's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make extra payments which apply toward your loan principal. Borrowers make this happen in a few different ways. Paying a single extra full payment one time a year is probably the simplest to arrange. However, many people will not be able to pull off this huge extra payment, so dividing an extra payment into twelve additional monthly payments is a great option too. Another option is to pay a half payment every two weeks. The effect here is that you make one extra monthly payment each year. Each of these options yields different results, but they will all significantly reduce 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. But you should remember that most mortgage contracts will allow additional payments at any time. Any time you get some unexpected money, consider using this rule to make an additional one-time payment toward your principal.
Here's an example: a few years after moving into your home, you receive a very large tax refund,a very large legacy, or a cash gift; , you could pay this windfall toward your loan principal, which would result in significant savings and a shortened payback period. For most loans, even this relatively modest amount, paid early enough in the mortgage, could offer big savings in interest and duration of the loan.
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