There's a trick to reduce the repayment period of your mortgage and save you thousands in interest: Make additional payments that are applied to the principal. You can pay against principal in many different ways. For many people,Perhaps the easiest way to keep track is to make 1 additional mortgage payment every year. However, some folks will not be able to pull off this huge extra expense, so dividing one extra payment into twelve extra monthly payments works too. Finally, you can pay half of your mortgage payment every other week. Each option produces slightly different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. But remember that most mortgage contracts allow additional payments at any time. You can take advantage of this provision to pay down your principal when you get some extra money. For example: a few years after moving into your home, you get a very large tax refund,a very large legacy, or a non-taxable cash gift; , you could pay this money toward your mortgage loan principal, which would result in enormous savings and a shorter loan period. For most loans, even a relatively small amount, paid early in the mortgage, could offer huge savings in interest and in the length of the loan.
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