Bi weekly payments anyone?

tiredredhead

Pay mortgage every two weeks instead of calender monthly, means you pay an extra payment every year but I think it also has a great effect on interest in the long run and can take months/years of term.

Can anyone shed any light on this idea?

I have googled it and found mostly american sites etc however i cant see why it wouldnt work here.

Does anyone do this and are there any good bi weekly mortgage calculators? Is it worth the hassle? I intend to overpay anyway from next month.
Cheers

determined1_2

Not sure about bi-weekly calculators, but it would be better to make all payments at the start of the month.

E.g. £1,000 on 1st insteat of £500 on 1st and £500 on 14th.

If you did it monthly, you would have 12 x £1,000 = £12,000 of payments

If you did it bi weekly, you would have 52 / 2 x £500 = £13,000

So yes, one extra payment.

But if you can afford the £13,000 a year, why not pay the £1,000 each month and overpay by £83.33 ((£13,000 - £12,000) / 12)

Doing it this way would save you more in interest than the bi weekly.

Quite simply, the sooner you pay, the better.

HTH

getmore4less

Yes it does work, because you OVERPAY.

In the US it is fairly common to get paid bi-weekly so that is why it is more common over there.

In the UK most people get paid monthly so that is the best way to pay your mortgage, as soon as you get paid pay your mortgage payment and any predicted(you do budget?) surplus as an overpayment(subject to any limits imposed by the lender)

One of the basic rules of borrowing
Borrow for the shortest time possible.

So pay as soon as you have the money for most people thats when you get paid.
(usualy best to leave a day or two with DD or SO in case you get paid late)

All the schemes that claim to cut years of your loans all work by overpaying in some way.

tiredredhead

Thanks for your replies. I have decided to just overpay what I can rather than the hassle of bi-weekly payments. I am on such a good interest rate at the moment that i would hardly save anything by using this system, rather than straightforward overpaying.