There's a trick to reduce the repayment period of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments which are applied toward the principal. People make this happen in several different ways. For many people,Perhaps the easiest way to keep track is to make one additional mortgage payment per year. But some folks can't pull off this huge extra payment, so dividing an additional payment into 12 additional monthly payments is a great option too. Another very popular option is to pay a half payment every other week. The effect here is that you make one additional monthly payment every year. Each option produces slightly different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Some people can't manage extra payments. But remember that most mortgage contracts will allow you to make additional principal payments at any time. Any time you get some unexpected cash, consider using this provision to pay a one-time additional payment toward your principal.
If, for example, you receive a very large gift or tax refund five years into your mortgage, investing a few thousand dollars into your mortgage principal will significantly shorten the period of your loan and save enormously on mortgage interest over the life of the mortgage loan. Unless the mortgage loan is very large, even a few thousand dollars applied early can produce huge benefits over the life of the loan.
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