Here's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make extra payments which apply to the principal. People employ various techniques to meet this goal. Paying one additional full payment one time per year is likely the easiest to arrange. Of course, some people will not be able to swing this huge extra expense, so dividing an extra payment into 12 additional monthly payments works as well. Finally, you can commit to paying a half payment every two weeks. These options differ a little in reducing the total interest paid and shortening payback length, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
Some people can't manage any extra payments. But remember that most mortgage contracts will allow additional principal payments at any time. Whenever you get some extra money, consider using this provision to pay a one-time additional payment toward your principal. If, for example, you receive an unexpected windfall five years into your mortgage, you could pay a portion of this money toward your mortgage loan principal, resulting in significant savings and a shorter payback period. For most loans, even a small amount, paid early in the mortgage, could offer huge savings in interest and length of the loan.
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