Here's a simple trick to reduce the repayment period of your mortgage and save thousands over the course of your loan: Make additional payments that are applied toward your principal. People employ various techniques to meet this goal. For many people,Perhaps the easiest way to keep track is to make 1 additional mortgage payment every year. But many people will not be able to swing such a large extra expense, so dividing one extra payment into twelve additional monthly payments works too. Another option is to pay half of your payment every other week. The effect here is that you will make one extra monthly payment each year. These options differ a little in lowering the final payback amount and shortening payback length, 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 down your principal every month or even every year. But you should remember that most mortgages allow additional principal payments at any time. You can take advantage of this provision to pay extra on your mortgage principal when you come into extra money.
For example: five years after moving into your home, you get a very large tax refund,a large legacy, or a non-taxable cash gift; , you could apply this money toward your mortgage loan principal, which would result in huge savings and a shortened payback period. For most loans, even a small amount, paid early enough in the mortgage, could offer huge savings in interest and duration of the loan.
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