Big Savings on Interest: Available to Anyone
Here's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make additional payments that go toward the loan principal. Borrowers make this happen in several ways. Making a single extra payment one time every year is likely the easiest to arrange. If you can't pay an extra whole payment all at once, you can divide your payment by 12 and write a check for that additional amount monthly. Finally, you can commit to paying a half payment every two weeks. These options differ a little in lowering the final payback amount and reducing payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Additional One-time payment
Some folks just can't make extra payments. But remember that most mortgages allow additional principal payments at any time. You can benefit from this rule to pay extra on your mortgage principal any time you come into extra money.
If, for example, you receive a large gift or tax refund three years into your mortgage, you could pay a portion of this windfall toward your mortgage loan principal, resulting in huge savings and a shortened loan period. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can produce huge benefits over the life of the loan.