Huge Interest Savings: Available to Anyone
Here's a simple trick to significantly reduce the length of your mortgage and save thousands in interest: Make additional payments that are applied to the principal. Borrowers use different methods to accomplish this goal. Making one additional full payment one time per year is probably the simplest to track. Of course, some people won't be able to swing such a large extra payment, so splitting one extra payment into 12 extra monthly payments works too. Another option is to pay half of your payment every other week. The result is you make one extra monthly payment every year. Each option yields different results, but each will significantly reduce the length of your mortgage and lower your total interest paid.
One-time Additional Payment
Some folks can't manage extra payments. Keep in mind that almost all mortgages will allow you to pay extra on your principal at any time. You can take advantage of this rule to pay down your mortgage principal when you come into extra money.
If, for example, you were to receive an unexpected windfall four years into your mortgage, you could pay a portion of this windfall toward your mortgage loan principal, resulting in enormous savings and a shorter payback period. Unless the mortgage loan is quite large, even small amounts applied early in the loan period can yield huge savings over the life of the loan.