Paying regular extra payments toward the principal yields enormous savings. You can pay extra on principal by employing various techniques. For many people,Perhaps the simplest way to keep track is by making 1 additional payment every year. But some folks can't swing such a large additional payment, so dividing one additional payment into twelve additional monthly payments works as well. Another option is to pay a half payment every two weeks. The result is you make one extra monthly payment in a year. Each of these options yields different results, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
Some folks just can't make any extra payments. Keep in mind that virtually all mortgage contracts will allow you to make additional payments to your principal at any time. You can take advantage of this rule to pay extra on your mortgage principal when you get some extra money. If, for example, you were to receive a surprise windfall five years into your mortgage, you could apply a portion of this money toward your loan principal, resulting in significant savings and a shortened payback period. Unless the mortgage loan is quite large, even modest amounts applied early can produce huge benefits over the duration of the loan.
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