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 the loan principal. People accomplish this goal in a few different ways. For many people,Perhaps the easiest way to organize this process is to make one extra mortgage payment per year. However, some folks can't swing such an enormous additional payment, so splitting a single additional payment into twelve additional monthly payments works as well. Another very popular option is to pay a half payment every other week. The effect here is that you will make one extra monthly payment in a year. Each option produces different results, but each will significantly shorten 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 more every month or even every year. But you should remember that most mortgage contracts will allow you to make additional principal payments at any time. Any time you come into unexpected money, consider using this rule to pay a one-time additional payment on mortgage principal. If, for example, you were to receive an unexpected windfall three years into your mortgage, you could apply a portion of this money toward your loan principal, resulting in huge savings and a shorter loan period. Unless the mortgage loan is quite large, even a few thousand dollars applied early can produce huge benefits over the duration of the loan.
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