Here's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make additional payments that go to the loan principal. People pay extra in several ways. For many people,Perhaps the easiest way to keep track is by making one additional mortgage payment every year. If you can't afford to pay an extra 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 two weeks. The effect here is that you will make one additional monthly payment every year. Each option yields different results, but they will all significantly reduce the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
It may not be possible for you to pay extra every month or even every year. Remember that almost all mortgages will allow you to pay extra on your principal at any point during repayment. Whenever you come into extra money, consider using this rule to pay an additional one-time payment on principal. If, for example, you were to receive a large gift or tax refund five years into your mortgage, paying several thousand dollars into your mortgage principal can significantly reduce the period of your loan and save enormously on mortgage interest over the life of the mortgage loan. For most loans, even a small amount, paid early enough in the loan period, could offer huge savings in interest and length of the loan.
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