There's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make extra payments which go toward your loan principal. Borrowers employ various techniques to accomplish this goal. For many people,Perhaps the easiest way to keep track is to make one additional payment per year. If you can't pay an extra 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 popular option is to pay a half payment every other week. The effect here is that you make one extra monthly payment every year. Each of these options yields slightly different results, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay more every month or even every year. But it's important to note that most mortgages will allow additional payments at any time. You can benefit from this rule to pay down your principal any time you get some extra money.
If, for example, you were to receive a large gift or tax refund three years into your mortgage, you could pay a portion of this money toward your mortgage loan principal, resulting in enormous savings and a shortened payback period. For most loans, even a relatively modest amount, paid early in the loan period, could offer huge savings in interest and duration of the loan.
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