[webmaven]

> Doesn't that automatically happen if you over-pay each month?

Short answer (in the US): Nope.

Basically, by default extra money comes off of the payments at the end of the mortgage, not off the principal.

Now, that said, some mortgages do allow you to apply an over-payment towards the principal, but you usually have to specify it for each payment you send in, they won't make it the default for your account. Oh, and they will likely only recalculate the size of your payments annually.

One final note: Keep in mind that paying extra (regardless of how it is applied) won't count for anything if you hit a bad patch and start missing payments, so if you are going to dump extra funds into your mortgage instead of hanging on to it, first build up a healthy cushion (3-6 months of all expenses).