The Truth Behind Saving With Bi-Weekly Mortgage Payments
Ever heard of opportunities where you can make paying the remaining amount for your loan a whole lot easier? There are plenty of things you can resort to. One is through mortgage refinancing where your interest rates can be lowered or you can also pay in a shorter period. Another is through extending your loan period so you will have lower monthly amortisations.
Amongst these options, there is one more way by which you can make paying your loans easier. This is through bi-weekly mortgage payments. The good thing about this type of payment is you are given a plan that will seem to simplify your payments, as if you have an automatic payment plan. You can also opt for this payment if you want to protect your finances in a more flexible manner especially if you want to use any extra cash for all your other needs. Want to know more about this option?
Understand how the system works
A bi-weekly mortgage payment, as the name implies, would change your usual monthly mortgage payments into paying every other week. Since there are 52 weeks in a year, you will be expected to pay 26 payments instead of the usual 12 months. The last two payments are credited to your principal balance as if it is considered a 13th month payment.
Due to the fact that you are making several payments, then you will save off as much money as you want. That will of course depend upon the interest rate on your mortgage. You can compute for that using the traditional method or ask help from financial experts who can enlighten you regarding that matter.
This is a strict contract
As with any other types of mortgage, a bi-weekly mortgage payment plan will only work to your advantage if you will pay your loan religiously. This means you have to stick to paying every other week. When you are ready for that kind of thing, you would need to run often to the bank or to the financial institution to make your payment. You would also need to schedule the payment plan accordingly.
Setting things up would require some things that you should remember
The automatic payment plan for this bi-weekly mortgage would require you to understand how the system works online. You would be required to make some indications on the form where you will enter how much of the money you will pay bi-weekly will go to the principal. For your 25th and 26th payments, everything else will be credited to the balance of your principal. Sending any extra payment would also require you to plot the numbers according to how much should be applied to the principal amount of the loan.
Does it really work to your advantage?
Considering that you make lesser payments and will be able to pay off your loan easily with a bi-weekly mortgage plan, you would definitely say that this would work to your advantage. Well, you may have to think again if that is your assumption. Remember that there is a downside to this plan and included in that is the fact that, like with any other loans, there comes a contract with this. This means that you are locked into the contract once you sign it which implies that you need to make payments every other week regardless of whether you have the money to pay for it or not. Otherwise, you will be demanded to pay a fine for not being able to make to the cut-off. That would hurt you a lot in the long run. Add to that the fact that you may be confused on how to set-up your account.
Are there better choices?
Yes of course, there are. If you intend to make your life easier especially when it comes to loan payments, you can always ask for a mortgage refinance, a debt consolidation method or any other noteworthy option that has already been proven to work to any borrower's advantage. These methods may vary from one lender to another but just the same, they can offer you the kind of breeze you have always wanted for your debts. What you simply need to do is to ask help from the provider of your choice and from there, you will understand how flexible these options are – definitely more flexible than making bi-weekly payments.
A good place to start making easier loan payments is to go through us. We have several mortgages on our list, each with advantages to help you with. We encourage you to give us a call if you have any other concern regarding our plans and programmes. We are more than ready to explain each of them to you. We will also assess which type of loan will work best for your financial needs. Talk to us, we are ready to listen!