Does a Bi-Weekly Payment Plan pay off your Home Mortgage faster?


Getting rid of a mortgage payment sounds appealing to any homeowner, so those Bi-Weekly Payment Plans offered to you by your mortgage lender might seem like a great idea. Before signing any paperwork, however, keep in mind that a bank-managed payment plan may not be your best option for owning your home faster.

How can I use a bi-weekly mortgage payment to own my home faster?

Considering that a typical 30-year fixed rate mortgage requires you to make 12 payments a year, you will make a total of 360 payments over the life of your mortgage. A bank-managed bi-weekly mortgage payment plan will allow you to rework a typical mortgage so instead of making one payment per month, you will make a payment every two weeks. This will add up to 13 payments through-out the year instead of 12. Since home mortgages are not set up to apply that 13th payment to principal and interest as a regular scheduled payment, the last payment of the year would be applied directly to the principle balance. This allows you to pay down your mortgage balance faster.

So, why not choose a bank-managed bi-weekly payment plan?

When you enroll in your bank’s plan to make bi-weekly payments, you are obligated to make those payments every two weeks on a set schedule; but with a self-managed payment plan, you’re free to make your bi-weekly payment, or to make a monthly payment depending on your needs. If you decide to rearrange your schedule, you can do so without penalty. Additionally, some banks charge a fee to administer the bi-weekly plan. Since it’s simple for you to implement on your own without the bank’s input, it would just be a waste of money that would be better spent on your mortgage principle.

How do I manage my own mortgage payment plan?

First, create a plan that works for you. You could make bi-weekly payments if you prefer, or you could simply add one-twelfth of a full payment to each monthly payment you make and get the same effect. For instance: Your monthly payment is $1,000.00. Send the bank a payment for $1,083.34 instead and at the end of the year you will have made your own 13th payment!

For more information about financing and your mortgage contact The Family Mortgage Team at LeaderOne Financial!

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