There's a simple trick to reduce the repayment period of your mortgage and save thousands in interest: Make additional payments which apply to the loan principal. Borrowers pay more on principal by employing various techniques. For many people,Perhaps the easiest way to keep track is to make one additional mortgage payment per year. However, some folks won't be able to afford such an enormous additional expense, so dividing an extra payment into twelve extra monthly payments works as well. Another popular option is to pay half of your payment every two weeks. The effect here is that you will make one additional monthly payment in a year. These options differ slightly 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 borrowers just can't make any extra payments. But it's important to note that most mortgage contracts will allow additional principal payments at any time. Any time you come into unexpected money, consider using this rule to make a one-time additional payment on your principal.
If, for example, you receive an unexpected windfall four years into your mortgage, paying a few thousand dollars into your home's principal will significantly reduce the duration of your loan and save enormously on interest paid over the life of the mortgage loan. For most loans, even this relatively small amount, paid early in the mortgage, could offer big savings in interest and in the duration of the loan.
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