There are very few people in the world that do not dream of having a place they can call their own. Slightly larger number is blessed with having one without having to pay for it, while mortgage is the only means of owning a home for a vast majority of people in the world. Unfortunately, bearing in mind the current economic situation, mortgage rates are a cause of constant headache and anxiety, and will continue to be for a long period of time. Still, is there a way to mitigate this situation? Luckily, there are biweekly payments, and here is what they are all about.
Biweekly term explanation – The name is pretty self-explanatory, you are paying your loan rates every two weeks. That means you will be paying smaller amounts and instead of 12 monthly rates you will end each year with 13 in total since each year has 52 to 53 weeks.
Saving money – Having those two extra payments a year means that you will reduce the principal loan, shorten your debt duration significantly, even up to 8 years, all depending on the initial duration arranged. Furthermore, by lowering your principal loan, you are reducing the interest rates as well.
Other types of debt – Biweekly payments are applicable to other types of debt, apart from mortgage loans. Using them to pay off your credit card debt is a sure way to save money. The same applies to or any other loan whose payment rates are calculated based on your average daily balance since you will be lowering it by making early and more frequent payments.
Banks – Quite simply, banks will not offer biweekly payments since shortening the period you are in debt it is not in their interest. You will have to turn to specialized companies, who will naturally have a fee. However, even including this fee you will be saving substantial amounts of money
Checking things before hand – The best way to be sure if biweekly payments are beneficial and how much time and money you will be saving with them is to use biweekly mortgage calculator. The numbers you get will paint a better picture than any set of words will in this case. Compare them to your loan payment scheme and you will see the general picture.
Income frequency – It does not really matter what the frequency of your income is, be that once a month, seasonal or once a year, you will certainly benefit from larger number of rates. Of course, being careful about your money and punctual when it comes to paying your rates is necessary, just as it was while you were paying your monthly rates. Of course, if you fit in the category of people who receive their paychecks every two weeks this would be the perfect solution for you. If you are a business owner, consider switching to this type of paycheck scheme, it will certainly make your life easier.
To sum up, paying your debt using biweekly payments is something that easily and effectively reduces and shortens your debt. The banks will not easily go along with your suggestions, but there are companies you can hire to do that for you and still save substantially. This is an opportunity you should not easily overlook.
Bio: Article by Dan Radak, a VPS security and Hosting generally specialist. Currently he is employed as a consultant in a couple of e-commerce companies. Lately he has been interested in financing related themes. You can follow him on Twitter.
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