Making regular additional payments on your loan principal yields singificant savings. You pay against principal by employing various techniques. Paying 1 additional payment once a year may be the easiest to track. But some people won't be able to swing such a large additional payment, so splitting a single additional payment into twelve additional monthly payments works too. Another option is to pay half of your payment every other week. The result is you make one additional monthly payment in a year. These options differ slightly in reducing the final payback amount and reducing payback length, but each will significantly reduce the length of your mortgage and lower your total interest paid.
Some people just can't make extra payments. But remember that most mortgage contracts will allow you to make additional principal payments at any time. You can benefit from this rule to pay down your principal any time you get some extra money.
If, for example, you were to receive an unexpected windfall five years into your mortgage, investing several thousand dollars into your home's principal will shorten the duration of your loan and save enormously on interest paid over the duration of the loan. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.
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