Here'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 to the loan principal. Borrowers can pay against principal by employing various techniques. Paying 1 extra full payment one time a year is likely the simplest to keep track of. If you can't pay an extra whole payment in one month, you can divide that payment by 12 and write a check for that additional amount monthly. Another option is to pay a half payment every other week. The result is you will make one additional monthly payment each year. Each of these options produces slightly different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some borrowers can't manage extra payments. But remember that most mortgages allow additional principal payments at any time. Whenever you get some extra money, consider using this rule to pay an additional one-time payment toward your principal.
If, for example, you receive an unexpected windfall four years into your mortgage, you could pay a portion of this windfall toward your mortgage loan principal, which would result in huge savings and a shortened payback period. For most loans, even a relatively modest amount, paid early enough in the loan period, could offer huge savings in interest and length of the loan.
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