Bi-Weekly Mortgage Payments

Some brokerage firms might offer you an option to pay back your mortgage faster.  The claim is that by making biweekly payments, instead of monthly payments, you’ll actually somehow end up paying an extra month’s balance every year.  This is because, instead of making 12 payments a year, you’ll be making one every two weeks, which adds up to 26 payments a year – the equivalent of 13 months.

You don’t need a broker to do this sort of thing for you, however.  If you are interested in paying back your mortgage faster, there are a variety of ways to do it, many of which have advantages over the biweekly broker method.  The primary disadvantage of that method is that you have to pay the broker additional funds to put the biweekly payment process into action.  For instance, you could contact your lender and request your monthly payment be increased.  By doing some careful calculations, you could arrange it so that by making 12 higher monthly payments a year, you’ll be paying the equivalent of 13 monthly payments.

Other methods include using your year-end bonus to make another month’s payment on the mortgage.  Lastly, you could set up a biweekly deposit account and make deposits into it with some discipline and practice.  The only differences between these methods and the broker’s method is that with the broker’s method you’ll be legally obligated to make biweekly payments, and this might motivate you more than just the thought of paying off your mortgage a few years earlier.  If you need that sort of encouragement, then feel free to use the broker’s method.  Just know that there are other ways to accomplish the same thing, and they don’t require paying a broker.