Bankrate follows a strict editorial policy, so you can trust that
we’re putting your interests first. Our award-winning editors and
reporters create honest and accurate content to help you make the
right financial decisions.
Key Principles
We value your trust. Our mission is to provide readers with
accurate and unbiased information, and we have editorial standards
in place to ensure that happens. Our editors and reporters
thoroughly fact-check editorial content to ensure the information
you’re reading is accurate. We maintain a firewall between our
advertisers and our editorial team. Our editorial team does not
receive direct compensation from our advertisers.
Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader.
Our goal is to give you the best advice to help you make smart
personal finance decisions. We follow strict guidelines to ensure
that our editorial content is not influenced by advertisers. Our
editorial team receives no direct compensation from advertisers,
and our content is thoroughly fact-checked to ensure accuracy. So,
whether you’re reading an article or a review, you can trust that
you’re getting credible and dependable information.
You have money questions. Bankrate has answers. Our experts have
been helping you master your money for over four decades. We
continually strive to provide consumers with the expert advice and
tools needed to succeed throughout life’s financial journey.
Bankrate follows a strict editorial policy, so you can trust that
our content is honest and accurate. Our award-winning editors and
reporters create honest and accurate content to help you make the
right financial decisions. The content created by our editorial
staff is objective, factual, and not influenced by our
advertisers.
We’re transparent about how we are able to bring quality content,
competitive rates, and useful tools to you by explaining how we
make money.
Bankrate.com is an independent, advertising-supported publisher
and comparison service. We are compensated in exchange for
placement of sponsored products and, services, or by you clicking
on certain links posted on our site. Therefore, this compensation
may impact how, where and in what order products appear within
listing categories. Other factors, such as our own proprietary
website rules and whether a product is offered in your area or at
your self-selected credit score range can also impact how and
where products appear on this site. While we strive to provide a
wide range offers, Bankrate does not include information about
every financial or credit product or service.
Dear Dr. Don,
Is splitting my monthly mortgage payment in half and paying it on the first and the 15th of each month helpful in reducing the principal and shortening the loan term? I want to reduce both without having to make additional payments. Will this method help?
— Kayla Curtailer
Dear Kayla,
Sorry, your plan won’t work. Lenders typically won’t let you do it, and there’s no real benefit from it either. Mortgage interest is paid in arrears, meaning this month’s mortgage payment covers last month’s interest expense. Splitting the payment this way actually increases your interest expense because the lender is waiting to get paid last month’s interest.
A biweekly mortgage plan can save interest expense and shorten the mortgage term. With a biweekly payment, you make a payment every two weeks, and that payment is half of a monthly mortgage payment. With 52 weeks in a year, you wind up making 26 biweekly payments, which is the equivalent of 13 monthly mortgage payments. Your first and 15th approach only has you making 24 payments, equivalent to 12 monthly mortgage payments.
I’m no fan of biweekly mortgages. You can do as well on your own by making additional principal payments over the year equal to that 13th payment. You don’t need to take on the added expense of a biweekly mortgage and by not making the payment mandatory, you retain the ability to skip an additional principal payment if money is tight that month.
If you want to pay off an existing loan faster, the best way to do it is to make additional principal payments.
Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.
Ask the adviser
To ask a question of Dr. Don, go to the “Ask the Experts” page and select one of these topics: “Financing a home,” “Saving & Investing” or “Money.” Read more Dr. Don columns for additional personal finance advice.
Bankrate’s content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate’s Terms of Use.
Share