There's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make extra payments which go to the principal. People make this happen in several ways. Making a single extra payment one time per year is likely the easiest to keep track of. But many folks can't pull off this huge additional expense, so dividing an extra payment into 12 additional monthly payments is a great option too. Finally, you can commit to paying half of your mortgage payment every two weeks. Each of these options produces different results, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
Some folks can't manage any extra payments. Keep in mind that most mortgages will allow you to make additional payments to your principal at any time. Any time you come into extra money, you can use this rule to make an additional one-time payment on your mortgage principal.
If, for example, you were to receive a very large gift or tax refund just a few years into your mortgage, you could apply this money toward your loan principal, resulting in significant savings and a shorter payback period. Unless the loan is very large, even modest amounts applied early can produce huge savings over the life of the loan.
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