Here's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make additional payments which go to the principal. You can do this in various ways. Paying one extra full payment once per year may be the easiest to keep track of. If you can't pay an additional whole payment all at once, you can divide that payment by 12 and pay that additional amount monthly. Another very popular option is to pay a half payment every other week. The result is you make one additional monthly payment in a year. These options differ slightly in reducing the final payback amount and reducing payback length, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Some folks just can't make extra payments. But it's important to note that most mortgages allow you to make additional payments at any time. Whenever you come into unexpected cash, you can use this rule to pay a one-time additional payment on your mortgage principal. If, for example, you receive a surprise windfall just a few years into your mortgage, you could apply a portion of this windfall toward your loan principal, resulting in significant savings and a shortened loan period. Unless the mortgage loan is very large, even a few thousand dollars applied early in the loan period can yield huge savings over the life of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.