There's a simple trick to reduce the repayment period of your mortgage and save thousands over the course of your loan: Make extra payments which go toward the principal. You can pay extra on principal by employing various techniques. For many people,Perhaps the simplest way to organize this process is to make 1 extra payment a year. But some people won't be able to afford this huge extra payment, so dividing an additional payment into 12 additional monthly payments is a great option too. Another option is to pay half of your payment every other week. The effect here is that you will make one additional monthly payment in a year. Each option yields slightly different results, but they will all significantly shorten the length of your mortgage and lower the total interest paid 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 permit you to make additional payments to your principal at any point during repayment. You can take advantage of this provision to pay extra on your mortgage principal when you come into extra money.
For example: several years after moving into your home, you receive a larger than expected tax refund,a large inheritance, or a cash gift; , you could apply a portion of this windfall toward your mortgage loan principal, which would result in huge savings and a shortened payback period. For most loans, even this relatively small amount, paid early in the loan period, could offer huge savings in interest and duration of the loan.
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