There's a simple trick to reduce the repayment period of your mortgage and save you thousands in interest: Make extra payments that apply to the loan principal. Borrowers can accomplish this using a few different techniques. Making a single extra full payment once every year is likely the simplest to track. If you can't pay an additional whole payment all at once, you can divide that payment by 12 and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every other week. Each of these options produces slightly different results, but each will significantly shorten 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 more every month or even every year. Remember that virtually all mortgages will permit you to pay extra on your principal at any time. Whenever you get some unexpected money, consider using this rule to pay a one-time additional payment on principal. If, for example, you receive a large gift or tax refund just a few years into your mortgage, you could pay a portion of this windfall toward your mortgage loan principal, resulting in huge savings and a shorter loan period. For most loans, even this relatively small amount, paid early in the loan period, could offer big savings in interest and length of the loan.
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