When you set up your mortgage payment repayment plan, you can choose between a standard repayment plan or a bi-weekly repayment plan. With the standard plan, it would take you 30 years to repay the loan while a biweekly plan will take 25 years and 3 months. This will save you 4 years and 9 months. But, the savings doesn’t end there.
If you took out a $225,000.00 loan with an interest rate of 5.000% and your federal tax rate is 26.000%, you can expect to pay $1,207.85 per month, while a bi-weekly payment plan will call for a payment of $603.92 every other week. As a result, you will pay only $170,761.00 in interest with the bi-weekly schedule rather than $209,825.51 with the standard payment plan. While this will result in a loss of $10,156.77 in tax benefits, you will still save a total of $28,907.74 with the bi-weekly plan.