Mortgage Payment Frequency
When you go for a loan to purchase a certain house, you must know that you have various options when it comes to the frequency of your payments. Although it’s quite common to pay your mortgage on a monthly basis, that doesn’t mean that you can’t decide on a different payment scheme.
There a number of factors that your mortgage broker takes into consideration before you decide on how you will pay your mortgage, however, the extra step you will take will be worth the effort. By deciding to go for an effective way of paying your mortgage, you can save a lot of money and can even be free from your mortgage much earlier. One of the most vital and sometimes ignored strategies in saving money is payment frequency. Many creditors will give you the option on the intervals of your mortgage payment depending on your needs.
The available payment types are:
Monthly Payment
This payment type typically withdraws the amount from your account once a month. Thus, you will be paying 12 times in a single year. Many mortgages are paid in this way.
Semi-Monthly Payment
This payment as indicated will let you pay your mortgage twice a month, on a specified day that you choose. This will result in making 24 payments in a single year. Don’t be confused semi-monthly with bi-weekly payment type.
Bi-Weekly Payment
This payment type will be withdrawn from your account every 2 weeks. This payment is very common since most workers are paid bi-weekly, thus making it easier to line up your mortgage payment with the time you get your salary. With the bi-weekly, you will end up paying 26 times in a year.
Accelerated Bi-Weekly
With the accelerated bi-weekly payment method, you will end up paying an extra month a year. Your payment will be withdrawn from your account every two weeks same as the bi-weekly payment by the payment is much higher compared to a normal bi-weekly payment.
Weekly Payment
As the name implies, this mode of payment is withdrawn from your account every week. This payment type will end up with you paying 52 times in a year.
Accelerated Weekly
Like the bi-weekly payment type, an accelerated weekly payment will end up with you paying an extra month every year. Payment is made every week but with a much higher amount compared to the normal weekly payment. This payment type will result in you paying your mortgage 3 years earlier which will help you save a lot of money.
Deciding on which payment type you will go for is a matter of convenience, however, there are a number of benefits you can get from paying your mortgage more frequently. If you increase your payment frequency, you will pay off the principal much faster, pay less interest and pay your mortgage much sooner.
Contact Rakhi Madan Mortgage Agent for more information.