There's a trick to reduce the repayment period of your mortgage and save thousands over the course of your loan: Make additional payments which apply to your principal. Borrowers can pay more on principal in various ways. For many people,Perhaps the easiest way to organize this process is to make 1 additional payment every year. However, some folks will not be able to pull off such a large additional expense, so splitting an additional payment into 12 additional monthly payments works as well. Finally, you can pay half of your mortgage payment every two weeks. These options differ slightly in lowering the total interest paid and reducing payback length, but each will significantly reduce the duration of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay down your principal every month or even every year. But you should remember that most mortgages allow additional payments at any time. You can take advantage of this rule to pay extra on your principal when you get some extra money.
If, for example, you were to receive a very large gift or tax refund just a few years into your mortgage, investing a few thousand dollars into your home's principal can reduce the duration of your loan and save enormously on mortgage interest over the duration of the mortgage loan. For most loans, even a small amount, paid early enough in the loan period, could offer big savings in interest and length of the loan.
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