Every mortgage situation is different, and due to the long-running nature of a given mortgage loan, we often don’t know exactly how our finances will be during the later stages. For people who do well in the intervening years, it’s common to look for ways to make mortgage payments faster and reduce the interest paid over the life of the loan.
At Altius Mortgage and our partners at Mortgage Ogden, we’re here to help. One great option here for many people is making biweekly payments instead of standard monthly ones – here are the basics of doing this, some cautions, and how it might benefit you.
Biweekly payments are what they sound like: Instead of paying once a month, you cut your monthly amount in half and send that amount in once every two weeks. There are a few formats through which this might be possible:
- Many lenders offer this option on their own
- If not, a third party can make this payment on your behalf for a small fee
- You can sometimes handle bi-weekly payment options on your own
There are a few cautions here to check on in advance:
- Be sure your lender allows biweekly payments, for starters. In addition, make sure they apply them to the principal balance rather than just holding the money until the second half arrives later in the month, then processing this all as a normal payment.
- If you have to use a third party, be careful here. Check on their fees, and check for that same issue of paying toward the principal as we mentioned above.
- If you plan to make these payments on your own, check with your lender to make sure there are no penalties and payments will be handled properly.
Benefits of Biweekly Payments
As long as your payments are processed as they are received, biweekly payments will lower your principal amount faster – in turn lowering the total amount you’ll pay over the life of the loan. This format will cause you to finish the year with 13 full payments made, rather than 12. In addition, paying every two weeks can be easier to budget for depending on when you receive paychecks.
If biweekly payments aren’t an option, there are a few other ways you can pay the mortgage down faster. You can set aside a monthly amount for an extra payment each year, being sure to specify this as a payment toward principal and not interest.
For more on paying a mortgage faster, or to learn about any of our available mortgages, speak to the staff at Altius Mortgage today.