Here's a simple trick to reduce the repayment period of your mortgage and save thousands in interest: Make extra payments which go to your principal. Borrowers use different methods to meet this goal. For many people,Perhaps the easiest way to keep track is to make one extra payment every year. If you can't afford to pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another popular option is to pay a half payment every two weeks. The result is you make one extra monthly payment every year. Each option produces slightly different results, 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 extra every month or even every year. Keep in mind that almost all mortgages will permit you to pay extra on your principal at any point during repayment. Whenever you come into unexpected money, you can use this rule to make a one-time additional payment on your mortgage principal.
If, for example, you receive a large gift or tax refund just a few years into your mortgage, investing a few thousand dollars into your mortgage principal will shorten the repayment duration of your loan and save enormously on mortgage interest paid over the life of the mortgage loan. For most loans, even a relatively modest amount, paid early in the loan period, could offer huge savings in interest and in the length of the loan.
Do you have a question regarding a mortgage program?