Here's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments which go toward your principal. Borrowers pay extra in several different ways. Making 1 additional payment once a year is probably the simplest to track. If you can't afford to pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another popular option is to pay a half payment every two weeks. The effect here is that you make one additional monthly payment in a year. Each option produces different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some borrowers can't manage any extra payments. But you should remember that most mortgages will allow additional payments at any time. You can benefit from this rule to pay extra on your principal any time you come into extra money. Here's an example: several years after buying your home, you receive a huge tax refund,a very large inheritance, or a non-taxable cash gift; , investing a few thousand dollars into your home's principal will significantly reduce the repayment duration of your loan and save enormously on mortgage interest paid over the life of the mortgage loan. Unless the loan is quite large, even modest amounts applied early in the loan period can yield huge benefits over the life of the loan.
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