There's a trick to reduce the repayment period of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments that apply toward your loan principal. Borrowers use different methods to meet this goal. For many people,Perhaps the simplest way to organize this process is to make 1 additional mortgage payment a year. But many folks can't pull off such a large extra payment, so splitting a single extra payment into 12 extra monthly payments is a fine option too. Another very popular option is to pay half of your payment every other week. The effect here is that you make one additional monthly payment in a year. Each option produces slightly different results, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay extra every month or even every year. Remember that most mortgages will permit you to pay extra on your principal at any point during repayment. You can take advantage of this rule to pay down your mortgage principal when you come into extra money.
Here's an example: five years after buying your home, you get a huge tax refund,a very large legacy, or a cash gift; , you could pay a portion of this money toward your mortgage loan principal, which would result in significant savings and a shortened payback period. Unless the mortgage loan is very large, even a few thousand dollars applied early can produce huge benefits over the duration of the loan.
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