There's a trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make additional payments which apply to your principal. You can pay extra on principal by employing various techniques. For many people,Perhaps the easiest way to keep track is by making one additional payment every year. But some folks can't swing such a large extra expense, so splitting an extra payment into twelve extra monthly payments works too. Another popular option is to pay a half payment every two weeks. The effect here is that you make one extra monthly payment every year. These options differ slightly in reducing the final payback amount and shortening payback length, but each will significantly shorten the length of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay down your principal every month or even every year. But you should remember that most mortgages will allow additional principal payments at any time. Any time you get some extra money, you can use this rule to make an additional one-time payment toward your principal.
If, for example, you were to receive an unexpected windfall just a few years into your mortgage, you could pay this money toward your loan principal, resulting in enormous savings and a shorter loan period. For most loans, even a relatively small amount, paid early enough in the loan period, could offer huge savings in interest and in the duration of the loan.
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