Here's a simple trick to significantly reduce the length of your mortgage and save thousands in interest: Make extra payments which apply to the principal. Borrowers use different methods to meet this goal. For many people,Perhaps the simplest way to keep track is by making 1 extra mortgage payment per year. If you can't pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every other week. These options differ slightly in lowering the total interest paid and shortening payback length, but each will 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 more 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. Whenever you come into unexpected money, you can use this rule to pay an additional one-time payment on mortgage principal.
If, for example, you receive a large gift or tax refund five years into your mortgage, you could pay a portion of this windfall toward your loan principal, which would result in enormous savings and a shortened loan period. For most loans, even a relatively small amount, paid early in the mortgage, could offer huge savings in interest and length of the loan.
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