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 toward the loan principal. You can pay against principal in various ways. Making 1 extra payment once a year is perhaps the easiest to keep track of. If you can't afford to pay an additional whole payment in one month, you can divide that payment by 12 and write a check for that additional amount monthly. Another very popular option is to pay a half payment every other week. The result is you make one extra monthly payment in a year. These options differ slightly in lowering the final payback amount and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. Remember that most mortgages will permit you to make additional payments to your principal at any time. Any time you come into unexpected money, you can use this provision to pay a one-time additional payment on mortgage principal.
If, for example, you receive a surprise windfall just a few years into your mortgage, paying several thousand dollars into your mortgage principal can reduce the repayment period of your loan and save a huge amount on interest paid over the life of the loan. For most loans, even this modest amount, paid early in the loan period, could offer huge savings in interest and length of the loan.
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