Here's a simple trick to reduce the repayment period of your mortgage and save thousands over the course of your loan: Make additional payments that apply to the loan principal. Borrowers make this happen in a few different ways. For many people,Perhaps the simplest way to keep track is to make one additional mortgage payment per year. However, many people can't swing such a large additional expense, so splitting a single extra payment into 12 additional monthly payments is a fine option too. Finally, you can pay a half payment every two weeks. These options differ a little in reducing the final payback amount and shortening payback length, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
Some folks just can't make any extra payments. But remember that most mortgage contracts allow additional payments at any time. Whenever you get some extra money, consider using this rule to make a one-time additional payment toward mortgage principal.
If, for example, you receive a large gift or tax refund five years into your mortgage, you could apply a portion of this windfall toward your loan principal, resulting in huge savings and a shorter loan period. Unless the loan is very large, even modest amounts applied early can produce huge savings over the duration of the loan.
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