Faster payments can save thousands in interest
Accelerating your mortgage payments is a way to pay off your mortgage earlier and reduce the overall amount of interest you pay over the life of your mortgage.
You should strongly consider accelerating your mortgage payments if interest rates and investment returns are low and mortgage rate is high, and of course, you have the spare cash… e.g., tons of money money in a non-interest bearing checking account and an 8% mortgage (and perhaps a 19.9% credit card)!!
Adding even a couple hundred dollars to your monthly payment can save you a lot over the life of the loan. Your mortgage loan will be paid off quicker.
Don’t accelerate your mortgage payments if your mortgage rate is low and investment returns are high elsewhere. You could invest your money at higher rates and come out ahead.
Several banks have a biweekly program that you can enroll in. Instead of the regular monthly payment, you pay half of your mortgage every two weeks. Therefore, instead of 12 monthly payments, you make 26 biweekly ones. Therefore, your extra 2 biweekly payments are spread out over the year.
The effect of biweekly payments will be to save you tens of thousands of dollars in interest and reduce the time to pay off your mortgage.
Try out our mortgage calculator to see the savings from biweekly payments.
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