Save on your Mortgage

There's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make extra payments that apply toward your principal. People make this happen in a few different ways. Making 1 additional full payment once a year may be the simplest to arrange. However, some people will not be able to swing this huge extra expense, so dividing one additional payment into twelve additional monthly payments works too. Finally, you can commit to paying half of your mortgage payment every two weeks. Each of these options yields different results, but they will all significantly reduce the length of your mortgage and lower your total interest paid.

Lump-sum Additional Payment

It may not be possible for you to pay more every month or even every year. Keep in mind that most mortgage contracts will allow you to pay extra on your principal at any point during repayment. Any time you get some unexpected cash, consider using this provision to pay an additional one-time payment on mortgage principal.

Here's an example: five years after moving into your home, you receive a very large tax refund,a very large inheritance, or a non-taxable cash gift; , you could pay a portion of this windfall toward your mortgage loan principal, which would result in significant savings and a shortened loan period. For most loans, even a modest amount, paid early in the loan period, could offer huge savings in interest and duration of the loan.