Here's a simple trick to reduce the repayment period of your mortgage and save you thousands in interest: Make extra payments that are applied to your principal. People use different methods to accomplish this goal. Paying 1 extra full payment once per year may be the simplest to keep track of. If you can't pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another very popular option is to pay half of your payment every other week. The effect here is that you make one additional monthly payment in a year. These options differ slightly in reducing the total interest paid and shortening payback length, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
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 allow you to make additional payments at any time. Any time you get some extra cash, consider using this rule to make a one-time additional payment toward principal.
If, for example, you were to receive a very large gift or tax refund four years into your mortgage, you could apply this money toward your loan principal, resulting in enormous savings and a shortened loan period. For most loans, even this relatively modest amount, paid early enough in the loan period, could offer huge savings in interest and in the length of the loan.
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