Here's a simple trick to significantly reduce the length of your mortgage and save you thousands in interest: Make additional payments that apply toward your principal. Borrowers accomplish this goal in a few different ways. Paying a single extra payment once a year is likely the easiest to arrange. 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 popular option is to pay half of your payment every other week. The effect here is that you will make one additional 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 duration 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 it's important to note that most mortgages will allow you to make additional principal payments at any time. You can take advantage of this provision to pay down your mortgage principal when you get some extra money.
For example: five years after moving into your home, you receive a very large tax refund,a very large inheritance, or a cash gift; , you could pay a portion of this money toward your loan principal, resulting in enormous savings and a shortened payback period. Unless the loan is very large, even a few thousand dollars applied early in the loan period can produce huge savings over the life of the loan.
Do you have a question regarding a mortgage program?