Here's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make extra payments which apply toward your principal. You can pay extra on principal by employing various techniques. For many people,Perhaps the simplest way to keep track is by making one additional payment per year. But many people can't swing this huge extra expense, so dividing one additional payment into 12 additional monthly payments works as well. Finally, you can pay a half payment every two weeks. These options differ a little in reducing the total interest paid and reducing payback length, 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 down your principal every month or even every year. Remember that most mortgage contracts will allow you to pay extra on your principal at any point during repayment. Whenever you get some unexpected cash, consider using this rule to make an additional one-time payment toward principal. Here's an example: five years after moving into your home, you get a very large tax refund,a large legacy, or a non-taxable cash gift; , you could pay this windfall toward your loan principal, resulting in enormous savings and a shorter loan period. For most loans, even a relatively small amount, paid early enough in the loan period, could offer big savings in interest and 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.