Here's a simple trick to reduce the repayment period of your mortgage and save thousands in interest: Make extra payments which apply to the principal. Borrowers pay against principal in various ways. Making one extra full payment one time every year is likely the easiest to track. If you can't afford to pay an extra whole payment in one month, you can divide that payment by 12 and write a check for that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. These options differ a little in reducing the total interest paid and shortening payback length, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Some folks can't manage any extra payments. But it's important to note that most mortgage contracts will allow you to make additional principal payments at any time. Whenever you come into extra cash, you can use this rule to make an additional one-time payment toward your principal.
If, for example, you were to receive a large gift or tax refund three years into your mortgage, paying a few thousand dollars into your home's principal can reduce the period of your loan and save enormously on mortgage interest paid over the life of the mortgage loan. Unless the mortgage loan is quite large, even small amounts applied early can produce huge savings over the duration of the loan.
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