There's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make additional payments which apply to your principal. Borrowers pay against principal by employing various techniques. For many people,Perhaps the easiest way to organize this process is by making 1 additional mortgage payment a year. Of course, some people will not be able to swing this huge extra expense, so dividing a single additional payment into twelve extra monthly payments is a great option too. Finally, you can pay half of your mortgage payment every other week. Each option yields slightly different results, but they will all significantly shorten the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Some borrowers just can't make any extra payments. But remember that most mortgages allow you to make additional principal payments at any time. Whenever you get some extra money, you can use 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 three years into your mortgage, investing several thousand dollars into your mortgage principal can significantly reduce the duration of your loan and save enormously on interest paid over the life of the mortgage loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early can produce huge savings over the duration of the loan.
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