There's a trick to significantly reduce the length of your mortgage and save you thousands in interest: Make additional payments that are applied toward the principal. Borrowers accomplish this goal in a few ways. For many people,Perhaps the simplest way to keep track is to make one additional payment a year. Of course, many folks won't be able to swing such an enormous extra expense, so dividing an additional payment into 12 additional monthly payments is a fine option too. Finally, you can pay half of your mortgage payment every other week. These options differ a little in reducing the final payback amount and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Some folks can't manage extra payments. Keep in mind that almost all mortgage contracts will permit you to make additional payments to your principal at any time. You can take advantage of this rule to pay extra on your mortgage principal any time you come into extra money. If, for example, you were to receive a very large gift or tax refund five years into your mortgage, you could pay this money toward your mortgage loan principal, resulting in huge savings and a shortened loan period. For most loans, even a small amount, paid early enough in the mortgage, could offer big savings in interest and length of the loan.
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