Big Interest Savings: Available to Anyone with a Mortgage
Paying consistent extra payments on the principal yields enormous returns. You can accomplish this in several ways. Making one extra full payment once every year is probably the easiest to track. But many folks can't pull off this huge extra expense, so splitting a single additional payment into twelve additional monthly payments works too. Another very popular option is to pay a half payment every other week. The result is you make one extra monthly payment each year. These options differ slightly in reducing the final payback amount and shortening payback length, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.
Lump-sum Additional Payment
Some people just can't make any extra payments. But remember that most mortgage contracts will allow additional principal payments at any time. You can take advantage of this rule to pay extra on your principal when you get some extra money.
Here's an example: several years after buying your home, you receive a larger than expected tax refund,a very large inheritance, or a non-taxable cash gift; , paying a few thousand dollars into your mortgage principal can shorten the duration of your loan and save enormously on mortgage interest over the duration of the mortgage loan. For most loans, even a small amount, paid early in the mortgage, could offer huge savings in interest and in the duration of the loan.