Question:

Is it faster to pay mortgage biweekly, or should I simply increase payment?

Answer:

Well, paying mortgage biweekly is a very effective approach on its own, but you could gain even better if you choose to make it on your own.

Increasing payment better than paying mortgage biweekly?

One of the reasons you will save more in interest if you simply make a bigger monthly payment is that while your funds are collected in a trust account, even if interest accrues on these payments, it does not go to you.

Another reason is that with paying mortgage biweekly the extra funds are not applied to the principal until the end of the year. Simply increasing your monthly payment will effectively reduce more of your loan principal with every payment instead of having to wait to be applied to the principal an entire year.

Lastly, before paying mortgage biweekly you need to pay a fee to the lender for switching to a biweekly repayment plan. You could easily avoid these fees and gain even greater benefits if you simply increase your monthly payments with less than 10%.

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