There's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars over the course of your loan: Make additional payments which are applied toward the loan principal. You can do this using a few different techniques. For many people,Perhaps the simplest way to organize this process is to make one extra payment every year. Of course, some people can't swing this huge additional payment, so splitting an additional payment into twelve extra monthly payments works too. Finally, you can pay half of your mortgage payment every two weeks. These options differ a little in lowering the total interest paid and reducing payback length, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
Some borrowers can't manage any extra payments. Remember that most mortgage contracts will permit you to pay extra on your principal at any time. Whenever you come into extra cash, you can use this provision to pay a one-time additional payment on mortgage principal.
If, for example, you receive an unexpected windfall four years into your mortgage, paying several thousand dollars into your mortgage principal will significantly reduce the duration of your loan and save a huge amount on interest over the life of the loan. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can produce huge savings over the life of the loan.
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