Big Savings on Interest: Available to Anyone
Paying consistent additional payments on your loan principal will provide huge savings. Borrowers accomplish this goal in several different ways. Paying one extra full payment one time every year is perhaps the simplest to keep track of. If you can't afford to pay an additional whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Another popular option is to pay a half payment every two weeks. The result is you make one additional monthly payment in a year. Each of these options produces slightly different results, but each will significantly shorten the length of your mortgage and lower your total interest paid.
Lump-sum Additional Payment
Some borrowers can't manage extra payments. But you should remember that most mortgages allow additional payments at any time. You can benefit from this provision to pay extra on your principal when you come into extra money. If, for example, you were to receive a very large gift or tax refund five years into your mortgage, paying several thousand dollars into your mortgage principal can reduce the duration of your loan and save enormously on mortgage interest paid over the life of the mortgage loan. Unless the loan is very large, even small amounts applied early can produce huge benefits over the duration of the loan.