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 24 years and 7 months. This will save you 5 years and 5 months. But, the savings doesn’t end there.
If you took out a $250,000.00 loan with an interest rate of 5.875% and your federal tax rate is 26.000%, you can expect to pay $1,478.84 per month, while a bi-weekly payment plan will call for a payment of $739.42 every other week. As a result, you will pay only $222,234.36 in interest with the bi-weekly schedule rather than $282,383.99 with the standard payment plan. While this will result in a loss of $15,638.90 in tax benefits, you will still save a total of $44,510.73 with the bi-weekly plan.