Here's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make extra payments that are applied toward your loan principal. People pay extra in several ways. Paying a single additional full payment once a year is likely the simplest to arrange. Of course, some people won't be able to afford such an enormous additional expense, so dividing one additional payment into 12 extra monthly payments works as well. Finally, you can pay half of your mortgage payment every two weeks. These options differ a little in reducing the final payback amount and reducing payback length, but each will significantly reduce the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
It may not be possible for you to pay down your principal every month or even every year. Remember 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 rule to pay extra on your mortgage principal when you come into extra money.
If, for example, you were to receive an unexpected windfall just a few years into your mortgage, investing a few thousand dollars into your mortgage principal will significantly shorten the period of your loan and save enormously on interest paid over the duration of the loan. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can produce huge benefits over the life of the loan.
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