Paying regular extra payments toward your principal balance provides enormous returns. Borrowers pay extra in several ways. Paying a single extra full payment one time per year may be the simplest to keep track of. However, many people won't be able to afford such an enormous extra payment, so splitting an extra payment into twelve extra monthly payments is a fine option too. Finally, you can commit to paying half of your mortgage payment every other week. These options differ a little in reducing the final payback amount and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
Some folks can't manage any extra payments. Remember that most mortgages will permit you to pay extra on your principal at any point during repayment. You can benefit from this rule to pay extra on your principal any time you get some extra money.
If, for example, you receive a surprise windfall three years into your mortgage, paying several thousand dollars into your home's principal can reduce the duration of your loan and save enormously on mortgage interest over the life of the loan. For most loans, even this modest amount, paid early enough in the mortgage, could offer huge savings in interest and in the length of the loan.
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