Can I Pay My Mortgage Weekly?

Mortgage payments are typically structured as monthly installments. While this standard schedule is common, alternative payment frequencies can offer different outcomes. Exploring options beyond the conventional monthly payment can provide flexibility and advantages depending on a homeowner’s financial situation and goals.

Understanding Mortgage Payment Schedules

Mortgage lenders offer several payment frequencies beyond the standard monthly schedule. A monthly payment involves 12 payments annually, made once each month on a set date. This is often the most straightforward option, aligning with household budgets.

Other common frequencies include semi-monthly, bi-weekly, and weekly payments. Semi-monthly payments involve 24 payments per year, typically made twice a month. Bi-weekly payments occur every two weeks, totaling 26 payments per year. Weekly payments are made once a week, resulting in 52 payments annually.

A distinction arises with “accelerated” bi-weekly or weekly payment plans. A regular bi-weekly plan divides the monthly payment by two for 26 payments. An accelerated bi-weekly plan calculates payments as half of a semi-monthly payment, resulting in 13 full monthly payments over a year instead of 12. Similarly, an accelerated weekly plan involves 52 payments annually, where the total annual payment equals 13 monthly payments, distributed weekly. This means you make the equivalent of one extra monthly payment over a 12-month period.

The Financial Impact of Accelerated Payments

Making accelerated mortgage payments can reduce the total interest paid over the life of a loan and shorten the repayment period. This benefit stems from consistently paying down the principal balance faster. Each payment contributes to reducing the outstanding loan amount, rather than just covering accrued interest.

Interest on a mortgage is typically calculated on the remaining principal balance. By reducing this balance more quickly, less interest accrues over time. This means that a larger portion of each payment goes towards the principal, rather than interest charges, particularly in the early years of the loan when interest typically constitutes a larger part of the payment.

Making the equivalent of one extra monthly payment per year can shave years off a 30-year mortgage, reducing the term by several years and saving tens of thousands of dollars in interest. This strategy allows homeowners to build equity in their property at an accelerated pace.

Steps to Arrange Weekly Mortgage Payments

To explore or arrange weekly mortgage payments, homeowners should first contact their mortgage lender or loan servicer. This is a primary step because not all lenders offer weekly payment options, and some may only provide bi-weekly plans. Inquire about the specific payment frequencies available through your current mortgage servicer.

During this conversation, confirm that any additional payments will be applied directly to the loan’s principal balance. Some lenders might otherwise apply extra funds to future scheduled payments or into an escrow account, which would not yield the same interest savings. Also, ask about any fees associated with changing your payment frequency or making accelerated payments. Many lenders do not charge for this, but confirm.

Once the options and terms are understood, you can work with your lender to set up the new payment arrangement. This often involves establishing automatic debits from your bank account to ensure consistent and timely payments. Automating payments can help maintain the accelerated schedule and avoid missed payments.