There's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments which apply to your principal. Borrowers pay extra in a few different ways. For many people,Perhaps the simplest way to keep track is to make 1 extra mortgage payment a year. However, many folks won't be able to afford this huge additional payment, so dividing a single extra payment into 12 extra monthly payments is a fine option too. Finally, you can pay a half payment every other week. These options differ slightly in lowering the final payback amount and shortening payback length, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.
Some folks can't manage any extra payments. But you should remember that most mortgages allow you to make additional payments at any time. You can benefit from this provision to pay extra on your mortgage principal when you get some extra money.
Here's an example: a few years after buying your home, you get a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , you could pay a portion of this money toward your mortgage loan principal, resulting in enormous savings and a shorter loan period. For most loans, even a modest amount, paid early enough in the mortgage, could offer huge savings in interest and in the duration of the loan.
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