There's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars over the course of your loan: Make additional payments which apply toward the principal. You can pay extra on principal in various ways. Paying 1 additional full payment one time every year is probably the simplest to arrange. Of course, some folks can't swing this huge additional expense, so splitting one additional payment into twelve additional monthly payments is a great option too. Finally, you can commit to paying half of your mortgage payment every other week. These options differ slightly in lowering the total interest paid and shortening payback length, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Some borrowers can't manage extra payments. But remember that most mortgages will allow you to make additional payments at any time. You can take advantage of this provision to pay down your mortgage principal any time you come into extra money.
If, for example, you were to receive a large gift or tax refund just a few years into your mortgage, you could apply a portion of this money toward your loan principal, resulting in huge savings and a shortened payback period. For most loans, even a modest amount, paid early in the mortgage, could offer huge savings in interest and in the length of the loan.
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