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 which are applied toward the principal. Borrowers can pay against principal in various ways. For many people,Perhaps the simplest way to keep track is by making one extra mortgage payment per year. If you can't pay an additional whole payment all at once, you can divide your payment by 12 and write a check for that additional amount monthly. Another very popular option is to pay half of your payment every two weeks. The result is you make one extra monthly payment in a year. These options differ a little in reducing the total interest paid 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 folks just can't make any extra payments. But it's important to note that most mortgage contracts allow you to make additional principal payments at any time. You can benefit from this rule to pay extra on your principal any time you get some extra money. If, for example, you receive a very large gift or tax refund just a few years into your mortgage, paying a few thousand dollars into your mortgage principal will shorten the period of your loan and save enormously on interest paid over the life of the loan. Unless the loan is very 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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