There's a trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make additional payments which go to your principal. Borrowers employ various techniques to meet this goal. For many people,Perhaps the simplest way to keep track is to make one additional payment every year. Of course, some people can't swing such a large extra payment, so dividing a single extra payment into 12 extra monthly payments is a great option too. Finally, you can pay a half payment every other week. Each of these options produces different results, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. Remember that most mortgages will permit you to make additional payments to your principal at any time. Any time you come into unexpected cash, consider using this rule to make an additional one-time payment toward mortgage principal. If, for example, you receive a large gift or tax refund five years into your mortgage, investing several thousand dollars into your home's principal will significantly shorten the repayment duration of your loan and save a huge amount on interest paid over the duration of the mortgage loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early can produce huge savings over the life of the loan.
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