Question:

How effective is a 13th mortgage payment?

Answer:

The famous 13th mortgage payment is achieved through adding 1/12th of a monthly payment to the mortgage premium each month, or through a complete mortgage payment once a year, or through a biweekly plan.

13th Mortgage Payment with a Biweekly Plan

Splitting your mortgage monthly payment in two and mailing it in every two weeks, according to a lender setup payment plan, ultimately results in one 13th mortgage payment yearly. The biweekly plan may cost you money, but the effect is real. The biweekly plan means that you are making 26 semi-monthly payments; that is, 13 mortgage monthly payments instead of 12.

Making 1/12 extra also results in one 13th mortgage payment annually.

To avoid the biweekly setup plan, try using your prepayment right. Send in an extra amount every month. If the extra amount equals 1/12th of the monthly mortgage premium, there you go - at the end of the year you would have made a 13th total mortgage payment.

The effect of the two is comparable but sometimes lenders will charge for setting up a biweekly payment plan. Making a whole 13th mortgage payment each year is also possible but most borrowers have difficulties coming up with a full extra monthly mortgage payment.

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