In order to pay off the loan sooner, gain equity on the property, and avoid paying too much interest, many borrowers choose to pay extra towards the principal balance every month, called “prepayments.” It is estimated that making one additional monthly payment every year can cut down the term of the loan by five years.
When taking on a mortgage, it helps if you understand exactly how your money is being allocated in order to make the most use of the loan. The structure of your payments will determine the final cost you’ll incur and how long it will be until you finally own your home.
Do you know what's on your credit report?
Learn what your score means.