There's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make extra payments that go toward your principal. You can do this in several ways. For many people,Perhaps the simplest way to keep track is to make 1 extra mortgage payment per year. If you can't pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another option is to pay a half payment every other week. The effect here is that you will make one additional monthly payment in a year. Each option produces different results, but each will significantly reduce the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. Remember that virtually all mortgages will permit you to make additional payments to your principal at any point during repayment. You can take advantage of this rule to pay down your mortgage principal any time you get some extra money. If, for example, you receive a surprise windfall just a few years into your mortgage, you could pay a portion of this windfall toward your loan principal, which would result in enormous savings and a shorter payback period. For most loans, even this relatively small amount, paid early enough in the loan period, could offer big savings in interest and 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.