A biweekly mortgage plan is a mortgage loan that provides for payments every two weeks instead of the usual monthly payment schedule. This is a payment mode that results to faster payoff of the loan principal and interest. Through this payment setup, a borrower is making 26 biweekly payments which is equivalent to 13 monthly payments in a year. This extra payment that the borrower makes results to significant savings in terms of the total interest paid for the mortgage loan.

You can significantly shorten the repayment period by a number of years and generate savings in interest. The amount that you can save will depend on the loan amount and the applied interest rate. However, you must understand that if you are not planning to stay in you home longer than 5 or 6 years, this payment mode will not have much impact.

Another reason why you have to consider biweekly mortgage is the convenience that you enjoy paying the same amount as that of loans paid monthly but divided in two smaller amounts paid every two weeks. But before you finalize your biweekly payment arrangement for your mortgage, you have to make sure that you can afford to pay the additional amount that is required each year for the entire repayment period.

The biweekly mortgage is actually a budget tool which homeowners can use to pace their payment mode while maximizing the potential savings that can be earned in the form of reduced interest payments. Mortgage companies normally charge a fee when borrowers opt for the bi-weekly mortgage. There are also companies that charge a set-up fee when traditional mortgage loans are converted to bi-weekly mortgage.

As an example, let us assume that you took out a $150,000 mortgage that will be amortized for 30 years at a fixed interest rate of 6% per annum. If you are going to adopt a monthly payment mode, your monthly amortization will be equivalent to $899. That total amount that you are going to pay for 30 years will be $323,968. The payment breakdown will be $150,000 return of principal and $173,968 interest payment.

On the other hand, if you are going to go for a bi-weekly mortgage payment, then your total interest payment will be reduced to $136,671. This means that you are save a total of 37,296 in interest payments.

All in all, biweekly mortgage is a practical payment for most homeowners. This is an ideal payment option especially for those fixed income earners who receive their income every two weeks. This allows you to spread out your mortgage obligation on the basis of the fixed schedule of release of your earnings. This makes it a lot easier for you to allocate the right amount of your income to pay your biweekly mortgage payment obligations. For some borrowers, this is a better option than paying a larger amount in one single go at the end of each month.

Before you make a go for an accelerated payment mode, it is important that you clarify with your lender all the incidental fees and charges for setting up a biweekly mortgage. Lending companies normally charge upfront and pre-payment fee. It is essential that you work the figures so that you will be able to determine the amount that you actually save.

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