There's a simple 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. Borrowers use different methods to accomplish this goal. Making one additional full payment once a year is probably the simplest to keep track of. Of course, many folks won't be able to afford such an enormous extra expense, so splitting an extra payment into 12 extra monthly payments is a fine option too. Another option is to pay a half payment every other week. The result is you make one additional monthly payment every year. These options differ slightly in lowering the final payback amount and reducing payback length, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.
Some folks can't manage extra payments. Remember that most mortgage contracts will permit you to make additional payments to your principal at any time. Whenever you get some unexpected money, consider using this rule to make an additional one-time payment toward your principal.
If, for example, you receive a large gift or tax refund five years into your mortgage, you could apply a portion of this money toward your mortgage loan principal, resulting in huge savings and a shortened payback period. Unless the mortgage loan is quite large, even small amounts applied early can yield huge savings over the life of the loan.
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