Should I pay my mortgage every 2 weeks instead of every month?

[Samuel Chua]

Should I pay my mortgage every 2 weeks instead of every month? Will my slight decrease of cash flow be worth it? Thanks!

[Kavin Kuykendall]

@Samuel Chua

As stated above, it depends what your goals are. But in my opinion the payoff is huge simply by splitting your monthly payment into two bi-weekly payments. Here’s some math:

Loan Amount: $250,000

Interest rate: 5.0%

Term: 30 years

If a homeowner in the above scenario made bi-weekly payments of $671.46 ($1454.82/month) the difference comes out to:

Paying off the loan in 25 Yrs 3 Mts (4 Yrs 9Mts faster)

A total monthly payment of $1,454.82 rather than $1,342.05 ($112.77 more per month)

$189,453.43 in interest paid rather than $233,139.46 (a savings of $43,686.43)

That’s a savings of $43,686.43 and almost 5 years of your life for an additional $112.77 a month.

Again it depends on your goals. If you need the cash now more than later, don’t worry about it. That’s the purpose of a loan. But if you’re into the long term, loan pay down/interest savings. It’s definitely a viable option.