There's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make extra payments which go toward the loan principal. You can do this in several ways. For many people,Perhaps the easiest way to organize this process is by making 1 extra mortgage payment every year. If you can't pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can pay a half payment every two weeks. Each option yields slightly different results, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay more every month or even every year. Remember that virtually all mortgages will permit you to pay extra on your principal at any time. You can take advantage of this provision to pay down your principal when you come into extra money.
Here's an example: five years after buying your home, you get a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , paying several thousand dollars into your mortgage principal can reduce the repayment period of your loan and save a huge amount on mortgage interest paid over the life of the mortgage loan. For most loans, even this relatively small amount, paid early enough in the mortgage, could offer big savings in interest and duration of the loan.
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