Here's a simple trick to reduce the repayment period of your mortgage and save you thousands in interest: Make additional payments that apply toward the principal. People employ various techniques to meet this goal. Making 1 additional full payment one time per year is likely the simplest to track. If you can't afford to pay an additional whole payment all at once, you can divide that payment by 12 and write a check for that additional amount monthly. Another very popular option is to pay a half payment every other week. The effect here is that you make one additional monthly payment every year. These options differ slightly in reducing the final payback amount and reducing payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some people just can't make any extra payments. But remember that most mortgage contracts will allow additional principal payments at any time. You can benefit from this provision to pay down your principal when you come into extra money.
If, for example, you receive a very large gift or tax refund five years into your mortgage, paying several thousand dollars into your mortgage principal can reduce the repayment period of your loan and save a huge amount on interest over the duration of the loan. For most loans, even a modest amount, paid early enough in the mortgage, could offer huge savings in interest and duration of the loan.
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