There's a trick to reduce the repayment period of your mortgage and save you thousands in interest: Make extra payments that go to your loan principal. People accomplish this goal in a few ways. Paying a single additional full payment once every year is perhaps the simplest to keep track of. However, many people will not be able to swing this huge extra expense, so dividing a single extra payment into 12 additional monthly payments is a fine option too. Another option is to pay half of your payment every other week. The effect here is that you make one extra monthly payment in a 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. Keep in mind that most mortgage contracts will allow you to make additional payments to your principal at any point during repayment. Any time you come into unexpected cash, you can use this provision to make a one-time additional payment on your mortgage principal. Here's an example: several years after moving into your home, you get a larger than expected tax refund,a very large inheritance, or a cash gift; , paying several thousand dollars into your home's principal can shorten the period of your loan and save a huge amount on mortgage interest over the duration of the mortgage loan. For most loans, even a small amount, paid early in the loan period, could offer huge savings in interest and in the length of the loan.
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