Bi-weekly payment

moneywise_2

Anyone heard of somthing called bi-weekly payment ?

For example, the monthly payment on a 100,000 8% loan for 30 years is 733.77. On a biweekly payment plan, you'd pay half this amount every two weeks, or 26 payments over a year. This is the equivalent of one extra monthly payment -- 13 instead of 12. You'd pay off your loan in 277 months, rather than 360 and save 44,160 in interest payments.

Alternatively, divide your monthly payment by 12, and add that amount (61.15) to your payment every month. The new payment would be 794.92. Over the year, you would pay an extra 733.77, the same as with the biweekly. But the loan would pay off in 275 months and you would save 45,906 in interest.

Why the difference? With a biweekly, it takes a year before additional payments are made to your principal. Only then do you begin saving on interest. It takes a year for biweekly payments to add up to an extra payment. During that year, your money accumulates in an account on which you receive no interest. If, however, you increase the monthly payment, principal is reduced by an extra 61.15 starting in the first month, and interest savings begin in the second month.

hope it help to you become mortages free quickly !

Joe_Bloggs

This has been mentioned before. It help to have interest cakculated daily where overpayments are concerned. It also helps to have a flexible overpayment facility.
J_B.

halloweenqueen_2

My mortgage providers wouldn't accept this, however they did tell me i could set up a standing order for overpayments.

comping_cat

halloweenqueen wrote:

My mortgage providers wouldn't accept this, however they did tell me i could set up a standing order for overpayments.

Mine are the same, however i can make unlimited overpayments whenever i like, and could also set up an additional standing order as well if i wanted to!! Ive just had my mortgage statement through, and my overpayments are already reducing my daily interest, so very happy i found these threads!!!!

halloweenqueen_2

Same here catowen or I will still be plodding along for the next 13+ years! I'm really hoping if i can keep up with my current overpayments I could be mortgage free in 5 years times and to be honest thats really spurring me on!.