Making regular extra payments toward your loan principal will yield enormous returns. Borrowers use different methods to meet this goal. Making one additional full payment once a year is perhaps the simplest to keep track of. However, many people won't be able to swing such an enormous additional payment, so splitting an additional payment into 12 extra monthly payments is a fine option too. Finally, you can commit to paying half of your mortgage payment every two weeks. Each option produces slightly different results, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. But it's important to note that most mortgages will allow additional principal payments at any time. Whenever you get some extra cash, consider using this provision to make an additional one-time payment on your mortgage principal.
If, for example, you were to receive a very large gift or tax refund just a few years into your mortgage, investing a few thousand dollars into your home's principal will shorten the repayment period of your loan and save enormously on interest paid over the life of the mortgage loan. Unless the loan is quite large, even a few thousand dollars applied early can yield huge savings over the duration of the loan.
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