There's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make extra payments that go to the principal. Borrowers can accomplish this in several ways. For many people,Perhaps the simplest way to keep track is by making one extra mortgage payment every year. If you can't afford to pay an additional 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 a half payment every other week. Each of these options yields different results, but each will significantly reduce the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. But it's important to note that most mortgages will allow you to make additional principal payments at any time. You can benefit from this provision to pay down your principal any time you come into extra money. 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 enormous savings and a shorter payback period. For most loans, even a small amount, paid early enough in the mortgage, could offer big savings in interest and duration of the loan.
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