Any additional payment made on your mortgage will end up saving you lots of money in interest. Every normal payment you make consists of principal and interest. The balance owing on your mortgage determines how much is interest. As the balance outstanding reduces, less of your payment goes to interest and more comes off the balance.  

The following are ways to reduce the amount you owe on your mortgage:

Increasing The Frequency Of Your Payments 

Most lending institutions offer you the choice of payment frequency.

The most common is MONTHLY, such as the 1st of every month. This is easy to remember if you are used to paying rent. Most lending institutions will let you make payments on a different date if that is more convenient for you - for example the 15th day of every month.  

Other options generally available are:  

Semi-monthly 

Payments are taken twice a month, usually on the 1st and the 15th. Payments are one half of the monthly amount. If you pay $1,000 per month X 12 months = $12,000 in payments per year With this option you pay $500 twice a month - $500 X 24 = $12,000. This option saves you very little money because you are paying the same annual amount, just a little bit quicker. See comparison for an example of the savings.  

Bi-weekly - accelerated  

Payments are exactly half of a monthly payment amount, collected every two weeks.  

Weekly - accelerated  

Same as bi-weekly accelerated, except that payments occur on the same day every week. Your payments will be one quarter of your normal monthly payment.  

10/10 15/15 20/20 

These numbers refer to the percentage the lending institutions will allow you to increase your payments by, or the percentage amount allowed as a lump sum payment.  

Increasing The Amount Of Your Payments  

Most lending institutions will allow you to increase the amount of your mortgage payment, some allow an increase once per year others only once per term. The amount of this increase varies from 10% to 20% depending on the lending institution.  

Paying Extra On Your Payment Dates 

Sometimes referred to as 'double-up' payments. Most lenders will allow you to make additional payment amounts on your mortgage. These extra amounts are principal only and reduce your mortgage balance and so you pay off your mortgage faster.

The best thing about this benefit is that you are in control of how much extra you pay, and when you pay it. There are some limitations which vary by institution, but generally speaking you can pay up to double your normal mortgage payment on any (or all) of your payment dates.  

Making Lump Sum Payments 

Most lending institutions will allow you to make large lump sum payments against your mortgage principal. These amounts are principal only and reduce the balance owing.  

The amounts vary by institution, some are up to 20% of the original mortgage amount. So if you borrowed $120,000 originally, they will allow you to pay up to $24,000. This is usually allowed on only one occasion per year.  

Each institution has different rules on the amount, and when, you can pay down on your mortgage. Some lenders combine the totals from 'additional mortgage payments' with 'lump sum payments'.  

Shorten Your Amortization At Renewal Date 

At the end of each term, you have a renewal date. If interest rates are about the same as during your old mortgage term, (or even lower), then you should consider decreasing your remaining amortization. A reduction in your amortization will result in your mortgage being paid off sooner.