Save Big on your Mortgage Loan
Making consistent extra payments on the loan principal provides big returns. People use different methods to accomplish this goal. Making a single additional full payment once a year is perhaps the simplest to keep track of. However, many people will not be able to afford this huge extra payment, so dividing a single extra payment into twelve extra monthly payments is a great option too. Another very popular option is to pay half of your payment every two weeks. The result is you make one additional monthly payment each year. These options differ a little in reducing the final payback amount and shortening payback length, but each will significantly reduce the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Additional One-time payment
It may not be possible for you to pay down your principal every month or even every year. But remember that most mortgage contracts allow additional principal payments at any time. Any time you get some extra money, consider using this rule to make a one-time additional payment toward your mortgage principal.
If, for example, you were to receive a large gift or tax refund just a few years into your mortgage, you could pay a portion of this windfall toward your loan principal, resulting in enormous savings and a shortened payback period. Unless the loan is very large, even a few thousand dollars applied early can produce huge savings over the duration of the loan.