Here's a simple trick to reduce the repayment period of your mortgage and save thousands in interest: Make additional payments that go to your loan principal. People accomplish this goal in a few different ways. Paying a single extra full payment once per year is probably the easiest to keep track of. But some people can't pull off such an enormous additional expense, so dividing one extra payment into 12 extra monthly payments is a fine option too. Finally, you can commit to paying half of your mortgage payment every other week. Each of these options yields different results, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the duration of the loan.
It may not be possible for you to pay down your principal every month or even every year. Remember that most mortgage contracts will allow you to make additional payments to your principal at any time. Whenever you come into extra cash, consider using this rule to make a one-time additional payment toward your mortgage principal. If, for example, you receive a very large gift or tax refund five years into your mortgage, investing a few thousand dollars into your home's principal can shorten the repayment period of your loan and save a huge amount on interest over the life of the loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early can produce huge savings over the duration of the loan.
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