Additional Payments Provide Huge Savings
There's a simple trick to reduce the repayment period of your mortgage and save thousands in interest: Make additional payments which apply toward your loan principal. Borrowers pay extra in a few ways. Making a single additional full payment one time a year is perhaps the easiest to keep track of. However, many people will not be able to pull off such an enormous additional payment, so dividing one extra payment into twelve extra monthly payments is a great option too. Another popular option is to pay half of your payment every two weeks. The result is you will make one extra monthly payment in a year. These options differ slightly in reducing the final payback amount and reducing payback length, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.
One-time Additional Payment
It may not be possible for you to pay more every month or even every year. But you should remember that most mortgage contracts allow you to make additional principal payments at any time. Whenever you come into extra cash, you can use this rule to make an additional one-time payment toward principal.
For example: a few years after moving into your home, you receive a huge tax refund,a large inheritance, or a non-taxable cash gift; , paying several thousand dollars into your home's principal will shorten the period of your loan and save enormously on mortgage interest over the life of the loan. For most loans, even this relatively small amount, paid early in the loan period, could offer big savings in interest and length of the loan.