Additional Payments Provide Big Mortgage Savings
Making consistent extra payments on your loan principal will yield singificant savings. Borrowers use different methods to meet this goal. Making a single additional full payment once every year is probably the simplest to track. If you can't afford to pay an extra whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Finally, you can pay half of your mortgage payment every two weeks. These options differ slightly in reducing the final payback amount and reducing payback length, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
Additional One-time payment
It may not be possible for you to pay more every month or even every year. Remember that most mortgage contracts will permit you to make additional payments to your principal at any time. You can take advantage of this provision to pay extra on your mortgage principal when you get some extra money. If, for example, you receive a surprise windfall five years into your mortgage, paying several thousand dollars into your mortgage principal will significantly shorten the repayment period of your loan and save enormously on interest paid over the life of the mortgage loan. For most loans, even this small amount, paid early in the mortgage, could offer huge savings in interest and in the length of the loan.