Here's a simple trick to reduce the repayment period of your mortgage and save thousands over the course of your loan: Make additional payments which go toward the principal. People pay extra in a few different ways. Paying one additional full payment one time a year may be the easiest to track. If you can't afford to pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every other week. Each option yields slightly different results, but they will all significantly shorten the length of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay extra every month or even every year. Remember that almost all mortgage contracts will permit you to make additional payments to your principal at any time. You can benefit from this provision to pay extra on your mortgage principal any time you get some extra money. For example: five years after buying your home, you get a huge tax refund,a large legacy, or a non-taxable cash gift; , you could pay a portion of this windfall toward your mortgage loan principal, which would result in huge savings and a shorter payback period. Unless the mortgage loan is quite large, even small amounts applied early in the loan period can produce huge savings over the life of the loan.
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