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If there was ever a little secret about how you could save lots of money in interest and payoff you mortgage faster this would be it. Most people already know the standard payment option on a mortgage is a monthly payment option. With this option you pay (1) full payment a month for a total of (12) payments a year. To use our free monthly mortgage payment calculator click here.
There is another option also and it is the bi-weekly payment option. With this option you pay (1) half of a payment every (2) weeks for a total of (26) payments a year. This equals out to an extra payment being made each year which goes directly to the principal and can cut a 30 year loan down to a little over 24 years. To use our free biweekly mortgage payment calculator click here.
Here is an example of the difference between the two types of payment options. Lets say you pay $600 a month $100,000 loan at 6% interest.
| Payment Frequency |
Time to pay off |
Total Interest you will pay |
Number of Payments |
Monthly
($600.00) |
30 years, 1 month(s) |
$115,548.50 |
361 |
|---|
Bi-Weekly
($300.00) |
24 years, 6 month(s) |
$90,843.73 |
294 |
|---|
As you can see the bi-weekly payment option is the best way to go if you can afford to make a half payment every (2) weeks. It will save you money and shorten the life of the loan.
Even if you currently have a loan that has the standard monthly payment option there are comapanies that will get you set up on a biweekly payment option. If you already have a loan click here and see how much a bi-weekly payment option will save you.
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