Making consistent additional payments toward the loan principal provides enormous savings. People employ various techniques to accomplish this goal. Paying 1 additional full payment one time every year is perhaps the easiest to keep track of. Of course, many folks can't swing such a large extra expense, so dividing one extra payment into 12 extra monthly payments works too. Finally, you can pay a half payment every other week. These options differ slightly in lowering the total interest paid 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 life of the loan.
Some borrowers just can't make any extra payments. But remember that most mortgage contracts allow additional payments at any time. You can take advantage of this provision to pay down your principal any time you come into extra money.
If, for example, you receive a very large gift or tax refund three years into your mortgage, paying several thousand dollars into your home's principal can reduce the repayment duration of your loan and save enormously on interest over the duration of the loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early can yield huge benefits over the duration of the loan.
Do you have a question regarding a mortgage program?