There's a trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make additional payments which are applied toward your loan principal. Borrowers employ various techniques to meet this goal. Paying a single extra payment one time a year is perhaps the easiest to track. But some people won't be able to pull off such a large extra expense, so splitting one additional payment into 12 additional monthly payments is a great option too. Another option is to pay half of your payment every other week. The effect here is that you will make one additional monthly payment in a year. Each option yields different results, but each will significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. Remember that almost all mortgage contracts will permit you to make additional payments to your principal at any time. You can take advantage of this rule to pay extra on your principal any time you come into extra money.
If, for example, you receive a large gift or tax refund just a few years into your mortgage, you could apply this money toward your mortgage loan principal, resulting in enormous savings and a shorter loan period. For most loans, even a modest amount, paid early in the mortgage, could offer big savings in interest and duration of the loan.
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