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 toward your loan principal. People make this happen in several ways. Making a single extra full payment once a year may be the easiest to track. Of course, many folks won't be able to pull off such an enormous additional payment, so splitting an extra payment into 12 additional monthly payments is a great option too. Finally, you can commit to paying half of your mortgage payment every other week. These options differ slightly in reducing the total interest paid and shortening payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some borrowers can't manage any extra payments. But it's important to note that most mortgages allow you to make additional payments at any time. Whenever you come into unexpected cash, consider using this provision to pay a one-time additional payment toward principal.
If, for example, you receive an unexpected windfall four years into your mortgage, investing a few thousand dollars into your home's principal will shorten the duration of your loan and save a huge amount on mortgage interest over the duration of the mortgage loan. For most loans, even this relatively small amount, paid early enough in the mortgage, could offer big savings in interest and duration of the loan.
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