Here's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make extra payments which apply to your principal. Borrowers can do this using a few different techniques. For many people,Perhaps the simplest way to keep track is to make one additional payment a year. If you can't pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. These options differ a little in reducing the final payback amount and reducing payback length, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. Remember that almost all mortgages will allow you to pay extra on your principal at any point during repayment. Any time you come into unexpected cash, consider using this rule to make a one-time additional payment toward your principal. If, for example, you were to receive an unexpected windfall five years into your mortgage, paying several thousand dollars into your mortgage principal can shorten the repayment duration of your loan and save enormously on interest paid over the life of the loan. Unless the mortgage loan is quite large, even modest amounts applied early in the loan period can produce huge benefits over the duration of the loan.
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