Paying regular additional payments on the loan principal provides big savings. Borrowers pay against principal in various ways. Making a single extra full payment one time every year is probably the easiest to keep track of. But some folks will not be able to pull off this huge additional expense, so dividing a single additional payment into 12 extra monthly payments is a great option too. Another very popular option is to pay a half payment every two weeks. The effect here is that you make one extra monthly payment in a year. These options differ a little in lowering the total interest paid and reducing payback length, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.
Some folks just can't make extra payments. Keep in mind that virtually all mortgage contracts will allow you to make additional payments to your principal at any time. You can benefit from this provision to pay extra on your mortgage principal any time you get some extra money. Here's an example: a few years after moving into your home, you receive a very large tax refund,a very large inheritance, or a non-taxable cash gift; , paying a few thousand dollars into your mortgage principal will shorten the duration of your loan and save a huge amount on mortgage interest over the duration of the loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early can yield huge savings over the life of the loan.
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