Here's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make additional payments that are applied to your loan principal. Borrowers pay against principal by employing various techniques. For many people,Perhaps the simplest way to keep track is to make one extra payment a year. If you can't pay an additional whole payment in one month, you can divide that payment by 12 and write a check for that additional amount monthly. Another popular option is to pay a half payment every two weeks. The result is you make one extra monthly payment each year. Each of these options yields slightly different results, but each will significantly shorten the length of your mortgage and lower the total interest paid over the life of the loan.
Some borrowers just can't make any extra payments. Remember that most mortgage contracts will allow you to make additional payments to your principal at any time. You can take advantage of this provision to pay down your mortgage principal any time you get some extra money. If, for example, you were to receive a surprise windfall four years into your mortgage, investing several thousand dollars into your mortgage principal will reduce the duration of your loan and save a huge amount on mortgage interest paid over the life of the loan. For most loans, even this small amount, paid early in the mortgage, could offer big savings in interest and in the duration of the loan.
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