There's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make extra payments that are applied toward your loan principal. People employ various techniques to accomplish this goal. For many people,Perhaps the easiest way to organize this process is by making 1 extra payment every year. Of course, many folks will not be able to afford such a large additional expense, so dividing an extra payment into 12 additional monthly payments works as well. Another popular option is to pay a half payment every two weeks. The result is you make one additional monthly payment each year. Each of these options produces slightly different results, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.
One-time Additional Payment
It may not be possible for you to pay down your principal every month or even every year. But you should remember that most mortgages will allow additional payments at any time. Any time you get some extra cash, consider using this rule to pay an additional one-time payment toward principal.
Here's an example: five years after buying your home, you receive a very large tax refund,a large inheritance, or a non-taxable cash gift; , investing several thousand dollars into your home's principal can significantly shorten the repayment period of your loan and save a huge amount on interest paid over the duration of the loan. Unless the loan is quite large, even small amounts applied early can produce huge benefits over the life of the loan.