Arts & Culture Cash Management

Finance with Gerald Dewes: What Advantages Does a Biweekly Mortgage Offer?

Most homeowners make their regular mortgage payments every month for the duration of the loan term, and never think of doing otherwise. But prepaying your mortgage or making biweekly payments can reduce the amount of interest you’ll pay over time.

Under a biweekly mortgage, instead of making the payments once a month, you make half your normal monthly payment every two weeks. For example, if your mortgage is $1,000 per month, under a biweekly system it would be $500 every two weeks.

If you maintain the biweekly payment schedule you’ll make an extra month’s payment over the course of each year (26 payments per year, which is the equivalent of 13 full monthly payments rather than 12). You’ll also pay less interest because your payments are applied to your principal balance more frequently.

The effect of biweekly mortgage payments can be dramatic. For example, if you currently have a $150,000 loan at 8 % fixed interest, you will have paid approximately $396,233 at the end of 30 years. However, if you use a biweekly payment system, you would pay $331,859 and have it completely paid off in 21.6 years. You would save $64,374 and pay the loan off 8.4 years earlier!

 

The information in this newsletter is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the ­purpose of ­avoiding any ­federal tax penalties. You are encouraged to seek advice from an independent tax or legal professional. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the ­purchase or sale of any security.

DISCLAIMER

Gerald R. Dewes does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Gerald Dewes


About the author

Gerald Dewes

Gerald R Dewes is the editor of the 'Finance' section of Artvoice.

Add Comment

Click here to post a comment

Leave a Reply

%d bloggers like this: