Here's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make additional payments which apply toward your loan principal. People accomplish this goal in a few ways. For many people,Perhaps the easiest way to organize this process is by making one additional payment per year. But many people can't pull off such an enormous extra payment, so dividing a single additional payment into twelve extra monthly payments works as well. Another very popular option is to pay half of your payment every two weeks. The result is you make one additional monthly payment in a year. Each of these options yields slightly different results, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
Some borrowers just can't make any extra payments. But you should remember that most mortgages allow additional principal payments at any time. Any time you come into unexpected cash, consider using this rule to make an additional one-time payment on your mortgage principal.
If, for example, you were to receive a surprise windfall four years into your mortgage, you could apply this money toward your loan principal, resulting in enormous savings and a shortened loan period. For most loans, even a modest amount, paid early in the mortgage, could offer big savings in interest and in the length of the loan.
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