Here's a simple trick to reduce the repayment period of your mortgage and save thousands in interest: Make extra payments that go toward your principal. People accomplish this goal in several ways. Paying one extra full payment once per year is probably the simplest to keep track of. If you can't pay an additional whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Another very popular option is to pay half of your payment every two weeks. The result is you will make one extra monthly payment every year. These options differ slightly in lowering the final payback amount and shortening payback length, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay extra every month or even every year. But it's important to note that most mortgages will allow you to make additional payments at any time. You can benefit from this provision to pay extra on your principal any time you come into extra money.
If, for example, you receive an unexpected windfall three years into your mortgage, investing several thousand dollars into your home's principal can significantly shorten the duration of your loan and save enormously on mortgage interest over the duration of the mortgage loan. For most loans, even this relatively modest amount, paid early enough in the loan period, could offer huge savings in interest and in the duration of the loan.
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