Here's a simple trick to reduce the repayment period of your mortgage and save thousands over the course of your loan: Make additional payments which apply to your loan principal. Borrowers accomplish this goal in a few different ways. Making a single additional payment once a year is probably the easiest to track. Of course, some folks won't be able to swing this huge additional payment, so splitting a single extra payment into twelve extra monthly payments is a great option too. Another very popular option is to pay a half payment every two weeks. The result is you will make one additional monthly payment each year. These options differ slightly in lowering the final payback amount and reducing payback length, but each will significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. Remember that virtually all mortgage contracts will allow you to pay extra on your principal at any time. Whenever you come into unexpected cash, you can use this rule to pay a one-time additional payment toward your principal. For example: a few years after moving into your home, you receive a larger than expected tax refund,a large inheritance, or a non-taxable cash gift; , you could apply a portion of this windfall toward your loan principal, which would result in huge savings and a shorter payback period. Unless the mortgage loan is quite large, even modest amounts applied early in the loan period can yield huge savings over the life of the loan.
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