Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make additional payments which are applied to the loan principal. You can accomplish this using a few different techniques. Paying one extra full payment one time every year is likely the simplest to track. But some people won't be able to pull off such an enormous additional payment, so splitting a single extra payment into twelve extra monthly payments is a great option too. Finally, you can commit to paying a half payment every two weeks. Each option yields slightly different results, but they will all 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. Remember that virtually all mortgages will allow you to make additional payments to your principal at any time. You can benefit from this provision to pay down your principal when you come into extra money. Here's an example: several years after moving into your home, you get a larger than expected tax refund,a very large inheritance, or a cash gift; , you could apply a portion of this money toward your loan principal, resulting in huge savings and a shorter payback period. Unless the loan is quite large, even modest amounts applied early can yield huge savings over the life of the loan.
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