Making consistent extra payments toward your loan principal yields huge returns. Borrowers can pay against principal by employing various techniques. Paying a single extra payment one time every year is perhaps the easiest to arrange. If you can't pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every other week. Each of these options yields slightly different results, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. But you should remember that most mortgage contracts will allow you to make additional principal payments at any time. Whenever you come into extra money, you can use this rule to pay a one-time additional payment on your principal. If, for example, you were to receive a large gift or tax refund four years into your mortgage, you could apply a portion of this money toward your loan principal, which would result in significant savings and a shortened loan period. For most loans, even this small amount, paid early enough in the loan period, could offer big savings in interest and length of the loan.
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