Paying regular additional payments toward your loan principal yields enormous returns. Borrowers pay against principal by employing various techniques. For many people,Perhaps the simplest way to keep track is by making one additional payment every year. Of course, some people will not be able to pull off such a large extra expense, so dividing one extra payment into twelve additional monthly payments is a great option too. Finally, you can commit to paying a half payment every other week. Each option produces different results, but each will 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. Remember that virtually all mortgages will permit you to pay extra on your principal at any time. Whenever you get some extra money, you can use this rule to make an additional one-time payment toward your principal.
If, for example, you were to receive a large gift or tax refund four years into your mortgage, paying several thousand dollars into your home's principal will significantly shorten the repayment duration of your loan and save a huge amount on interest over the duration of the mortgage loan. For most loans, even this relatively modest amount, paid early in the mortgage, could offer big savings in interest and in the duration of the loan.
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