There's a trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make extra payments which apply to the principal. People accomplish this goal in several ways. Making one additional payment one time a year is perhaps the easiest to arrange. Of course, some people won't be able to swing this huge extra expense, so splitting an extra payment into 12 additional monthly payments works too. Another option is to pay half of your payment every other week. The result is you make one additional monthly payment every year. Each of these options produces slightly different results, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.
It may not be possible for you to pay more every month or even every year. Remember that virtually all mortgages will allow you to make additional payments to your principal at any point during repayment. Whenever you get some unexpected money, consider using this provision to pay a one-time additional payment on principal. Here's an example: five years after moving into your home, you receive a huge tax refund,a very large legacy, or a non-taxable cash gift; , you could apply this windfall toward your loan principal, which would result in enormous savings and a shortened loan period. Unless the mortgage loan is quite large, even small amounts applied early can yield huge savings over the duration 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.