Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make extra payments that are applied toward the principal. Borrowers can do this using a few different techniques. For many people,Perhaps the simplest way to organize this process is to make 1 extra mortgage payment per year. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another option is to pay half of your payment every two weeks. The effect here is that you make one additional monthly payment every year. These options differ a little in reducing the final payback amount and reducing payback length, but they will all significantly reduce the duration 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 extra every month or even every year. Remember that almost all mortgage contracts will allow you to pay extra on your principal at any time. Whenever you get some extra cash, consider using this rule to pay an additional one-time payment on mortgage principal.
If, for example, you receive an unexpected windfall five years into your mortgage, investing a few thousand dollars into your mortgage principal can significantly shorten the repayment period of your loan and save a huge amount on mortgage interest paid over the duration of the mortgage loan. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can yield huge benefits over the duration of the loan.
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