Making regular additional payments on your loan principal yields singificant savings. Borrowers can do this in various ways. Paying a single extra payment one time a year is likely the easiest to arrange. However, some folks won't be able to afford such an enormous extra expense, so dividing an additional payment into 12 additional monthly payments is a fine option too. Another popular option is to pay a half payment every two weeks. The effect here is that you will make one additional monthly payment in a year. Each of these options produces slightly different results, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay extra every month or even every year. Remember that virtually all mortgage contracts will allow you to pay extra on your principal at any time. Any time you come into unexpected cash, consider using this provision to pay an additional one-time payment toward principal.
For example: a few years after buying your home, you get a huge tax refund,a large legacy, or a cash gift; , investing a few thousand dollars into your mortgage principal can significantly reduce the repayment period of your loan and save enormously on interest paid over the life of the mortgage loan. For most loans, even this modest amount, paid early in the loan period, could offer huge savings in interest and duration of the loan.
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