There's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make additional payments that apply to your loan principal. You can pay extra on principal by employing various techniques. For many people,Perhaps the easiest way to keep track is by making 1 extra mortgage payment per year. If you can't afford to pay an additional whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every other week. These options differ a little in reducing the total interest paid and reducing payback length, but they will all significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.
Some borrowers just can't make extra payments. Keep in mind that almost all mortgages will allow you to make additional payments to your principal at any time. You can benefit from this provision to pay down your mortgage principal any time you get some extra money. If, for example, you receive a large gift or tax refund five years into your mortgage, investing a few thousand dollars into your mortgage principal can reduce the repayment period of your loan and save a huge amount on interest paid over the life of the mortgage loan. For most loans, even a modest amount, paid early in the loan period, could offer huge savings in interest and in the length of the loan.
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