Making regular extra payments toward the loan principal provides singificant savings. Borrowers can pay against principal by employing various techniques. For many people,Perhaps the simplest way to organize this process is to make 1 additional mortgage payment per year. If you can't pay an extra whole payment all at once, you can divide your payment by 12 and write a check for that additional amount monthly. Finally, you can commit to paying a half payment every two weeks. Each option produces different results, but each will significantly shorten the length of your mortgage and lower your total interest paid.
Some folks just can't make any extra payments. But you should remember that most mortgages allow you to make additional payments at any time. Any time you get some unexpected cash, you can use this provision to make a one-time additional payment on your principal.
If, for example, you receive a large gift or tax refund three years into your mortgage, paying several thousand dollars into your mortgage principal will reduce the duration of your loan and save enormously on mortgage interest paid over the duration of the loan. For most loans, even this small amount, paid early in the mortgage, could offer huge savings in interest and in the duration of the loan.
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