Here's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars over the course of your loan: Make additional payments which are applied to your principal. Borrowers can pay more on principal in various ways. For many people,Perhaps the simplest way to keep track is by making 1 additional mortgage payment per year. However, some people will not be able to afford such a large additional expense, so splitting a single extra payment into twelve extra monthly payments works too. Another very popular 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 each will significantly reduce the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Additional One-time payment
It may not be possible for you to pay extra every month or even every year. But it's important to note that most mortgage contracts will allow you to make additional payments at any time. You can benefit from this rule to pay extra on your mortgage principal any time you get some extra money. Here's an example: five years after moving into your home, you receive a very large tax refund,a very large inheritance, or a non-taxable cash gift; , investing a few thousand dollars into your mortgage principal will significantly reduce the duration of your loan and save a huge amount on interest over the duration of the mortgage loan. For most loans, even this small amount, paid early in the mortgage, could offer huge savings in interest and duration of the loan.