Fortunately, there’s a simple strategy that can shave years off your mortgage and save you thousands of dollars in interest!
Making bi-weekly accelerated payments is one of the easiest ways to make your mortgage disappear!
Most of us pay our mortgage each month but accelerated bi-weekly payments can put thousands of dollars back in your pocket without the need to save up lump sum payments.
All you need to do is divide your monthly payment by two and pay that amount every two weeks. The result will be 26 payments over the course of the year which translates into 13 monthly payments instead of 12.
You'll essentially be paying the equivalent of an extra monthly payment each year without even realizing it. The additional amount directly pays down the principal which will significantly reduce the amount of interest you’ll have to pay.
Let’s say for argument’s sake you had a $500,000 mortgage at 2.5% amortized over 25 years. If you take advantage of the accelerated bi-weekly payment strategy, you’ll save around $20,000 in interest and your mortgage will be paid off nearly three years sooner!
Fitness clubs often use this same payment strategy but in reverse. For example, a gym may offer a membership for $24 every two weeks so in your mind you think “that’s only $48 a month” but in fact, it’s actually going to cost you $52 a month because of the extra two payments each year.
Most banks won’t charge fees or penalties for this type of payment option but be sure to ask upfront to confirm. There are other ways to pay your mortgage off faster so please don’t hesitate to get in touch if you ever have any questions. You have nothing to lose and thousands to gain!