Mortgage is the loan taken with the sole purpose of the purchasing a property. In return, the lender gets the first claim on the property in case of default of the loan. There are many types of mortgages offering different repayment plans. These repayment plans are the equated monthly installments that you have to pay every month towards the repayment of the loan. These plans consider the period of the mortgage, principal borrowed and the rate at which interest is charged, to compute the installment. The term can be biweekly, bimonthly, or monthly.
Monthly payments are determined by dividing the total amount of the mortgage (amount borrowed + interest levied) with the period of mortgage. This payment should be made once every month and remains the same throughout the duration of the mortgage.
Biweekly payments mean the entire installment is paid in two halves, two times each month. Instead of making a single payment each month, you make a payment after successive two weeks. This means at the end of the year, you repay an amount, which is same as that paid with 13 monthly payments, instead of normal 12. This means you can pay off mortgage faster and save money due to reduction in outstanding balance.
Bimonthly payment plan involves paying the installment twice a month. This lets you pay off your mortgage a month in advance. If you have some spare cash, you can make extra payment towards the principal component of the mortgage.
Tags: Mortgage Payments, Payments Guide