There's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make extra payments which are applied to your loan principal. Borrowers make this happen in a few different ways. For many people,Perhaps the easiest way to organize this process is to make one additional mortgage payment a year. But many people can't afford such a large additional payment, so splitting a single additional payment into 12 extra monthly payments is a fine option too. Another popular option is to pay a half payment every two weeks. The result is you make one additional monthly payment every year. Each of these options produces slightly different results, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
Some borrowers can't manage any extra payments. Keep in mind that most mortgages will permit you to pay extra on your principal at any point during repayment. Whenever you get some unexpected cash, you can use this rule to make a one-time additional payment on principal. If, for example, you were to receive a very large gift or tax refund four years into your mortgage, investing a few thousand dollars into your mortgage principal will reduce the repayment period of your loan and save enormously on interest over the life of the mortgage loan. Unless the mortgage loan is very large, even a few thousand dollars applied early can yield huge benefits over the life of the loan.
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