There's a trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make extra payments which go toward the loan principal. Borrowers accomplish this goal in a few ways. Making one additional payment one time a year may be the simplest to track. Of course, some people won't be able to afford such an enormous extra expense, so splitting one additional payment into twelve extra monthly payments works as well. Another popular option is to pay a half payment every other week. The result is you make one additional monthly payment every year. These options differ a little in lowering the final payback amount and shortening payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some people can't manage any extra payments. Remember that virtually all mortgages will permit you to make additional payments to your principal at any time. You can benefit from this rule to pay extra on your mortgage principal when you get some extra money.
If, for example, you were to receive a large gift or tax refund five years into your mortgage, paying a few thousand dollars into your mortgage principal can reduce the duration of your loan and save a huge amount on mortgage interest over the life of the mortgage loan. Unless the mortgage loan is very large, even small amounts applied early in the loan period can yield huge savings over the duration of the loan.
Do you have a question regarding a mortgage program?