Big Interest Savings: Available to Anyone with a Mortgage
There's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make additional payments which apply toward the loan principal. Borrowers pay more on principal in many different ways. For many people,Perhaps the simplest way to organize this process is to make one extra payment a year. If you can't pay an extra 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 a half payment every other week. The effect here is that you make one extra monthly payment in a year. Each option yields slightly different results, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
One-time Additional Payment
Some borrowers can't manage any extra payments. Keep in mind that almost all mortgages will allow you to make additional payments to your principal at any time. You can take advantage of this provision to pay extra on your principal any time you come into extra money. If, for example, you were to receive a very large gift or tax refund three years into your mortgage, investing several thousand dollars into your mortgage principal can reduce the repayment period of your loan and save enormously on interest paid over the life of the loan. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can yield huge benefits over the duration of the loan.