Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make extra payments that apply to your loan principal. Borrowers can do this in various ways. For many people,Perhaps the easiest way to organize this process is by making one additional payment every year. If you can't 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 popular option is to pay half of your payment every other week. The result is you will make one additional monthly payment in a year. These options differ slightly in reducing the final payback amount and shortening payback length, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Some people just can't make extra payments. Keep in mind that almost all mortgages will permit you to pay extra on your principal at any time. Whenever you come into extra money, consider using this rule to make a one-time additional payment on your mortgage principal. If, for example, you receive a very large gift or tax refund four years into your mortgage, you could apply a portion of this money toward your mortgage loan principal, which would result in significant savings and a shorter loan period. For most loans, even a relatively modest amount, paid early enough in the mortgage, could offer huge savings in interest and in the duration of the loan.
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