There's a trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make extra payments that go toward the loan principal. You pay against principal by employing various techniques. Paying a single extra payment once per year is perhaps the easiest to keep track of. However, many people will not be able to swing such a large additional payment, so splitting one additional payment into 12 extra monthly payments works as well. Finally, you can pay half of your mortgage payment every other week. These options differ slightly in lowering the final payback amount and reducing payback length, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Some people can't manage extra payments. But it's important to note that most mortgages will allow additional principal payments at any time. Any time you get some extra money, you can use this rule to make an additional one-time payment on your mortgage principal. For example: a few years after buying your home, you receive a huge tax refund,a large inheritance, or a cash gift; , you could apply this windfall toward your loan principal, which would result in huge savings and a shorter loan period. For most loans, even this relatively small amount, paid early in the loan period, could offer huge savings in interest and in the length of the loan.
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