If you are wondering how to pay off the mortgage quickly? Simply by syncing your paycheck cycle with mortgage payments.

You might be surprised to know that you can take advantage of this surprisingly simple trick to pay your mortgage quickly and save yourself thousands of dollars in the process.

And the good news is that you don’t have to subsist on noodles to pay off the mortgage faster with this trick. It won’t cost you an arm and a leg.

Biweekly Paycheck Cycle

The Bureau of Labor and Statistics mentions that around a third of US companies pay their employees biweekly (meaning every two weeks). Chances are you may be paid biweekly. If so, you are in luck, for this trick it is easy to apply for those who receive biweekly paychecks.

How It Works

Here is the trick in simple words. No, it is not a gimmick, nor is it magic. When you receive your paycheck, just pay half the mortgage for the month in simple mathematical terms.

With biweekly mortgage payments, you make 13 mortgage payments each year instead of 12 as we continue explaining how this works. The mortgage will be paid off sooner since you are paying more each year.

Paying off that mortgage in a shorter time frame means that you will save money on interest. The good news is that you will save a substantial sum of money – thousands of dollars at the very least.

13 Payments Instead Of 12?

You will certainly want to know how you will be making 13 payments each year for the mortgage instead of 12 monthly payments. There are 52 full weeks in a year, making biweekly mortgage payments for the total that can be calculated by dividing 52 weeks by 2 for the total of 26 biweekly payments in one year.

As mentioned earlier, you will be making two biweekly payments for each (monthly) mortgage payment and two biweekly payments represent exactly one mortgage payment. Simple enough?

So, how many mortgage payments are there in 26 biweekly payments you will make in a year? You can calculate this figure by dividing 26 by 2 for a total of 13 mortgage payments annually. This will help you learn that this system implements 13 mortgage payments annually instead of the standard 12 payments.

How Much Interest Will I Save?

You can calculate this figure to estimate interest savings for this method. Suppose your new home costs $250,000.

If your mortgage is to be repaid in 30 years and charges an interest rate of 5%, then how much will you have to pay in total? The estimated total you’ll be paying is around $483,000.

The interest is calculated subtracting the total mortgage payments with the cost of the home. For example, 483,000 – 250,000 = $233,000! Using the Bankrate mortgage payment calculator, you can plug in these figures and find the total interest for biweekly payments.

You can calculate your savings by subtracting the calculated interest rate of $233,000 from the previous equation and the total interest with biweekly payments of $174,500. For example, subtract 233,000 from 174,000 for a total savings of $58,500. This shows that you can save more with biweekly payments.

There is just one caveat though, you should check the terms and conditions of your mortgage contract to see if there are penalties for accelerated payments. If there are penalties for accelerated payments, then you likely won’t save much money on interest.

Bottom Line

We hope this was a good read for you! Now you can quickly pay off the mortgage by syncing your paycheck cycle with mortgage payments.