There's a trick to reduce the repayment period of your mortgage and save thousands over the course of your loan: Make extra payments that go to the principal. Borrowers employ various techniques to meet this goal. Making 1 extra payment once per year is perhaps the simplest to arrange. Of course, some folks won't be able to afford such a large additional payment, so splitting one extra payment into twelve extra monthly payments is a great option too. Finally, you can commit to paying half of your mortgage payment every two weeks. Each option yields different results, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. Remember that virtually all mortgages will permit you to make additional payments to your principal at any point during repayment. You can benefit from this rule to pay extra on your mortgage principal any time you come into extra money.
If, for example, you were to receive a large gift or tax refund five years into your mortgage, you could apply this money toward your loan principal, resulting in significant savings and a shorter loan period. Unless the mortgage loan is quite large, even a few thousand dollars applied early can yield huge savings over the duration of the loan.
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