Can You Pay Off Your Mortgage Faster By Paying Twice A Month?


What can you do if you would like to pay off your mortgage faster? Let’s say that life has been good for you and your family and you have a better job with a higher salary. And you still have that 15-year mortgage that takes a cut out of your cash flow every month. You would like to accelerate your payments to pay down the mortgage and get rid of it faster. But you would also just as soon not be as strapped for cash as you were at your previous salary when you bought your home.

One easy option is to pay your mortgage in two installments a month instead of one. And the first half is paid two weeks early. This is a relatively pain-free way to accelerate your mortgage payments. For a mortgage with a higher interest rate, this method can get your mortgage paid off several years earlier than expected.

Can you really pay off your mortgage faster just by paying twice a month? The key is that the half you pay two weeks early reduces the principal (the amount that you owe) two weeks earlier than normal. This very slightly reduces the interest due when you pay the other half at the end of the month at which time you are paying the other half of the principal payment. These slight reductions in interest payment add up and bit by bit reduce the principal you owe more quickly than a normal payment schedule. The higher the interest rate that you pay, the more quickly you can pay off your mortgage with this method.

Will Your Lender Allow This?

Ask your lender if they will allow you to do this. Some are happy to oblige you and others will refuse. Be careful that they don´t charge you a fee to make twice-monthly or any type of early payment because this would negate the benefit of these multiple early payments.

If a bank does not allow twice monthly payments of this sort you might consider opening an interest-bearing account at this or another bank and depositing the early payment half way through the month. Then you can withdraw the money at month’s end to add to the other half and make your interest payment. You will gain interest in your bank account which will add up over time. However, this is not the best substitute for making biweekly payments.

Talk To Your Realtor Up Front

When you are in the market for a home you will want to get pre-approved for your mortgage. Ask your real estate agent about lenders and ask him or her to direct you to one that accepts early mortgage payments and does not penalize you for making them. When you are just starting out on your quest to buy a new home there are several decisions to make that are very important, like the right to make early mortgage payments. Talk to your realtor early and often and be informed about the things that will make your home purchases totally successful.


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 Can You Pay Off Your Mortgage Faster By Paying Twice A Month?

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