Are you considering a biweekly mortgage that could potentially save you thousands in overall loan cost? With a biweekly mortgage, you make payments two times a month that are each half of your usual monthly payment. Biweekly mortgage payments can help reduce the overall loan costs and allow for quicker loan repayment.
How Do Biweekly Mortgages Work?
A biweekly mortgage is a type of financing in which you pay off a portion of a loan twice a month. By paying half of the regular mortgage payment each two weeks, a homeowner can make 26 half-payments over the course of a year, instead of 12 full payments. This can save you thousands in interest. The other advantage of biweekly mortgage payments is that the loan balance will decrease quicker because of the frequent payments, which also leads to reduced interest over the life of the loan.
Benefits of Biweekly Mortgages
The main benefit of a biweekly mortgage payment plan is that it keeps more money in your pocket by reducing the amount of interest you pay over the life of the loan. This type of payment plan can help homeowners save money in the long run. Additionally, a biweekly mortgage plan can also accelerate loan repayment, enabling the purchaser to have their mortgage paid off faster than they would have with a conventional mortgage.
How Does a Biweekly Mortgage Plan Differ from a Traditional Mortgage Plan?
The main difference between a biweekly mortgage plan and a traditional mortgage plan is frequency of payments. With a traditional mortgage, you make one payment each month. With a biweekly mortgage, you make two payments each month. This has the potential to significantly reduce the amount of interest you pay over the life of the loan. Additionally, if the payments are made electronically and the mortgage company withdraws the payments directly from the account, it can make the process easier for both the borrower and lender.
Can I Switch From a Conventional Mortgage to a Biweekly Mortgage Plan?
In some cases, it may be possible to switch from a conventional mortgage plan to a biweekly mortgage plan. However, depending on the type of loan and the financial institution, this type of switch may not be possible. It is best to consult your mortgage lender to determine whether or not this is an option for you.
Conclusion
Biweekly mortgage plans can save homeowners thousands in overall loan costs and help them pay off their loan sooner. However, not all financial institutions offer biweekly mortgage plans. Before deciding to switch to a biweekly mortgage plan, it is important to understand the difference between traditional mortgages and biweekly mortgages and do some research to see if your financial institution offers this type of plan.