It Pays to Pay Your Mortgage Twice a Month

by Ann Hayward 06/06/2021

Photo by cottonbro from Pexels

We all know how hard the beginning of the month can be; it seems like there are a million bills due all at the same time, and one of those bills is usually the most expensive among them all—your mortgage. After you budget for all of your expenses, that gigantic payment can really make a big impact on your bank account. That's just one reason why some homeowners choose to pay their mortgage in halves twice a month, rather than monthly as a whole.

Paying Your Mortgage Differently Than Traditional Monthly Payments

You might be able to choose to pay your mortgage bi-weekly or semi-monthly. Generally speaking, these are the same thing. However, a few days' difference here and there actually means that you would make 26 payments throughout the year if you paid bi-weekly, which is the same as 13 months' worth of payments. Semi-monthly payments would be paid twice a month, which comes out to 12 months' payments at the end of the year. Both are beneficial for several reasons, but obviously, you'll be paying a whole extra month if you pay bi-weekly, which can really cause the savings to add up over the life of a loan.

The difference comes in the timing in which your payments would be due. If you're paid on the 15th and last day of the month, bi-weekly payments can be tricky because there will be two times a year in which your payment will be due before your paycheck arrives. However, you can still opt for semi-monthly payments that get paid in accordance with your pay schedule.

The Benefits of Paying Your Mortgage Twice a Month

Let's start with the obvious benefit: you'll spread one amount of money across two payments. That means you'll have more money leftover during the initial payment date than usual and you can put that extra cash toward principle or put it in a savings account until the next payment's due so it can collect a little interest. Not only that, but because there's less time between payments, there will be less interest since interest is calculated at a daily rate. Since each payment will push a little more money toward principle, you'll actually end up paying your mortgage off faster than you would if you paid monthly in most cases. Be sure to check your loan documents to verify that you don't have a pre-payment penalty before you put this plan into place!

Before you commit to (or keep going with) monthly payments on your mortgage, stop and think about the benefits you could gain from splitting your payments in half. This is a great way to spread out the cost of one of your biggest expenses while simultaneously ensuring you're chipping away at your principle.

Home Loan

Mortgage Payment

Personal Finance

About the Author

Ann Hayward

Born in Philadelphia and raised in the suburbs, Ann Hayward got her Pennsylvania real estate license at age 18 even before going to college. This second-generation real estate professional followed in the footsteps of her father and two uncles, inheriting their passion for the business. Licensed in DC, Maryland and Virginia, Ann is accomplished in her career, with numerous designations including SFR, SRES, PSA, WHC, and multiunit Housing Development Finance Professional (HDFP) from the National Development Council. She specializes in Prince Georges and Montgomery Counties, Northern Virginia and Washington, DC, all jurisdictions where Ann has lived and knows very well. In addition to her professional expertise, she owns and manages personal investment property, understands and has been involved in the renovation/remodeling process, and has great resources which she shares with clients. When you hire Ann to represent you, she will make your buying or selling experience an enjoyable, rewarding one. Her compassion, sensitivity to her clients’ needs, eye for detail, and ability to see the big picture when guiding you through a purchase or sale are unique assets that will ensure your success. A diverse and relevant background also gives Ann a distinct edge. For 30 years, she worked in fast-paced, high-pressure television and theatrical production, attaining the highest achievement – DGA membership as a Director, and as an award-winning staff and freelance writer. Her keen audio visual skills and design sense benefit sellers in marketing their properties, and are invaluable in helping buyers see the potential of space. A true renaissance woman, Ann was also an income tax professional and office manager for H&R Block, so she thoroughly understands the tax and financial implications of acquiring and selling real estate. Her superior organizational skills are further evidenced as owner of a downsizing/professional organizing business, Managed For You, which allows her to connect with everyone from millennials to boomers and seniors, whether for small space planning or assisting with major decluttering and transitioning. Ann holds an AB in American History from Simmons College, Boston, plus attended Robert Wagner Graduate School of Public Administration where she was a candidate for Doctorate. She additionally studied Film Direction at the American Film Institute in LA, and was a Stanford University post-graduate Professional Journalism Fellow. Personally, Ann is an avid if not very good golfer, and the co-founder of a nonprofit 501c3 organization offering educational guidance, tutoring and counseling for youngsters from elementary school through college admission. She sits on the board of trustees of a nonprofit educational film production corporation as well. (202) 494-6252 [email protected]