Making regular additional payments toward your principal balance yields big savings. Borrowers employ various techniques to meet this goal. For many people,Perhaps the simplest way to organize this process is to make one additional payment a year. If you can't afford to pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another very popular option is to pay half of your payment every other week. The result is you will make one extra monthly payment in a year. These options differ a little in reducing the total interest paid and shortening payback length, 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 down your principal every month or even every year. But it's important to note that most mortgage contracts will allow you to make additional payments at any time. You can benefit from this provision to pay extra on your mortgage principal any time you get some extra money.
If, for example, you were to receive an unexpected windfall four years into your mortgage, investing several thousand dollars into your mortgage principal will reduce the repayment duration of your loan and save a huge amount on mortgage interest over the duration of the mortgage loan. Unless the mortgage loan is very large, even modest amounts applied early in the loan period can produce huge benefits over the life of the loan.
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