Is It Better To Make Your Home Loan Payments Weekly, Every Two Weeks, Or Monthly – Prt

One frequently hears that it is preferable to make mortgage payment every week, or once every two weeks – hypotheque. What is the result of this strategy? In order to be able to analyse this question, we have to define the two possible bi-weekly payment possibllities: accelerated weekly payment minimum weekly payment The most .mon method is the accelerated weekly payment. It is really the monthly payment divided by 4. But in actuality, there is not 4 weeks in a month, but a little more. This method is called the accelerated payment method because is has 4 extra weekly payments over the course of the year and this fact alone increases the payment made against the capital of the home (prt hypothcaire) loan during the year. The other method is the minimum weekly payment. It is the minimum payment that you can make on your mortgage until the end of the amortization period, and the home loan is fully paid. It is evident that the savings from these different two mortgage payment (hypotheque) methods is not the same. The minimum weekly payment just increases the frequency of the payments from 12 times a year to 52 times per year, and the accelerated weekly payment increases not only the frequency of payments, but also adds 4 additional payments. Let’s look at the result of my studies on mortgage payments for these two cases. The minimum weekly payment Summary: 1. The minimum weekly payment method saves $1,294.12 on a $200,000 loan amortized over 25 years with an annual rate of 5.4%, .pared to monthly payments – prt hypothecaire. 2. The higher the interest rate, the better the weekly payment works. If the rate is doubled, the savings will be 7.08 times greater. 3. One receives 43% more savings with a weekly payment than with a payment every two weeks (14 days) and the rate of interest does not make a difference. Why? The explanation is simple, but difficult to describe. Since there is less time between each payment, one part of the capital is repaid a few days earlier, which more quickly reduces the interest paid on the amount that is paid down. The savings is minimum for each payment but increases dramatically over time. Conclusion: The more frequent the payments, the greater the savings, even if you do not increase the amount paid. If it is possible, make your payments each week, if not, pay your mortgage every two weeks – prt hypothcaire. The accelerated weekly payment If you decide to pay your payments with the accelerated weekly payment method, it will increase the payment by $23.25 per week on the $200,000 mortgage (at 5.4%, amortized over 25 years). With this case, the mortgage is paid off in 1,107 payments, or 21.3 years and the total savings will be $28,173.78i (see the calculations at the end of the article.) The only exception to this rule would be if you have a fixed or guaranteed investment which is paying 7.52% interest per year, before taxes. Yes, it is imperative to choose the best payment method for your mortgage, but the really important thing is to choose the best mortgage strategy for your circumstances. Notes : If someone buys a home for $200,000 (with a rate of 5.4%) and pays it once a month ($1,209.16 a month), he will have paid $362,749.83 after 25 years ($200,000 plus $162,749.83 in interest); on the other hand, with accelerated weekly payments ($302.29 per week), he will have paid $334,576.05 ($200,000 plus $134,576.05 interest) in 1,107 weeks our 21.3 years. This is a savings of $28,173.78 ($362,749.83-$334,576.05) to pay the same mortgage. 相关的主题文章: