Here's a simple trick to reduce the repayment period of your mortgage and save you thousands in interest: Make additional payments which apply toward your principal. People use different methods to meet this goal. Making one extra payment one time per year may be the easiest to keep track of. But many people can't swing this huge additional payment, so dividing a single extra payment into 12 additional monthly payments works as well. Finally, you can pay a half payment every two weeks. Each of these options produces slightly different results, 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. Keep in mind that virtually all mortgage contracts will permit you to pay extra on your principal at any point during repayment. Any time you come into unexpected money, you can use this provision to make a one-time additional payment on principal. If, for example, you receive a large gift or tax refund four years into your mortgage, investing several thousand dollars into your home's principal can shorten the duration of your loan and save enormously on mortgage interest over the life of the loan. For most loans, even a relatively small amount, paid early enough in the mortgage, could offer huge savings in interest and in the duration of the loan.
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