Paying regular extra payments toward your principal balance can yield enormous returns. Borrowers employ various techniques to accomplish this goal. Paying 1 additional full payment once every year may be the simplest to arrange. Of course, some folks won't be able to pull off this huge extra expense, so dividing an additional payment into twelve extra monthly payments works too. Another option is to pay half of your payment every other week. The result is you make one extra monthly payment in a year. These options differ slightly in lowering the final payback amount and shortening payback length, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay extra every month or even every year. But it's important to note that most mortgage contracts allow you to make additional principal payments at any time. Whenever you get some unexpected money, you can use this provision to make a one-time additional payment on mortgage principal. If, for example, you receive a very large gift or tax refund just a few years into your mortgage, you could apply this money toward your loan principal, which would result in enormous savings and a shorter payback period. Unless the mortgage loan is quite large, even modest amounts applied early in the loan period can produce huge benefits over the duration of the loan.
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