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Can Making Bi-Weekly Mortgage Payments Save You Money?

Owning a home is a dream for many, but the reality of mortgage payments can sometimes feel like a financial burden. However, there's a savvy strategy that can not only ease the load but also save you money in the long run: making bi-weekly mortgage payments.

Most homeowners opt for the traditional monthly mortgage payment schedule, but if your mortgage servicer allows it - the bi-weekly payment approach offers several advantages. Let's explore how this simple change in payment frequency can have a significant impact on your financial well-being.

1. Faster Loan Repayment:

One of the most significant benefits of bi-weekly payments is that you end up making an extra month's worth of payments each year. While it might not sound like much, over the life of your loan, this adds up to a substantial reduction in the overall repayment period. By making 26 half-payments (equivalent to 13 full payments) instead of the standard 12 payments per year, you effectively accelerate your mortgage payoff.

2. Interest Savings:

The real magic happens when you consider the impact on interest. With bi-weekly payments, you reduce the outstanding balance on your loan more frequently. As interest is typically calculated on the remaining balance, making payments every two weeks means you pay less interest over time. This translates to substantial savings and can potentially shave years off your mortgage term.

3. Build Equity Faster:

As a homeowner, equity is the difference between your home's market value and the outstanding balance on your mortgage. By paying down your mortgage more quickly with bi-weekly payments, you're building equity at an accelerated pace. This not only increases your stake in your home but can also provide you with more financial flexibility in the future.

4. Financial Discipline:

Bi-weekly payments align with most people's paycheck schedule, making it easier to manage your finances. This regular, smaller payment can be more manageable and less stressful than a larger monthly payment. Additionally, since you're making payments more frequently, you're less likely to feel the financial strain that can come with a once-a-month payment.

So, Can Making Bi-Weekly Mortgage Payments Really Save You Money By Paying Less Interest?

The Bottom Line:

While the idea of making more frequent mortgage payments might seem daunting, the long-term benefits far outweigh the initial adjustment. Whether you're an expert investor, it's your second home, or you're a first time homebuyer, bi-weekly payments not only help you repay your loan faster but also result in substantial savings on interest. Your mortgage balance accrues interest every single day that goes by, so reducing the principal balance every 2 weeks or 14 days typically saves you more in interest charges than making one extra payment every 12 months. This strategy provides a tangible path to financial freedom and homeownership without breaking the bank. Consider discussing this option with your lender and take a step toward a brighter, more financially secure future.

bi weekly home

Can Making Bi-Weekly Mortgage Payments Save You Money? Talk with your mortgage banker or lender and ask about the possibility of making bi weekly payments. Ross Varahrami has been practicing in the mortgage industry for some time and comes from over a decade of industry experience. He's local to Orange County California and can help answer any questions that you may have.

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