Bi-weekly mortgage payments - good idea?

[ukgaz]

So in the process of buying first home with the Wife and I wanted to get the forums views on Monthly vs. Bi Weekly payments

When the bi -weekly was being explained to me I could see the advantage of 13th payment (26 half payments each year) every year but have read on line that when splitting the monthly payment up into Bi-weekly the lender simply holds on to your first payment until the second payment is made. They then apply it to your loan rather than apply the first payment (reducing interest and principal)and then finally the second payment

Is this true? If it is then I will stick to the monthly payment and then apply extra payments towards the principal

[disneysteve]

The bi-weekly plan is a gimmick, especially if they charge you to set it up. Just add 1/12 of your monthly payment to your regular payment each month and you accomplish the same thing for free.

[cschin4]

It is a gimmick, you can do the same thing on your own by just sending in a bit extra on your principal.

[ukgaz]

Thanks Guys. I'm just going to do the monthly and make the extra payments on my own

[snafu]

It's so easy to spend the extra payment on some other item unless it's written into your budget. Check with the lender to ensure there is no fee for added payment, whether there is a minimum or rules to apply. Run the figures for yourself, you will be shocked at how large a difference a small amount makes in reducing the years of payment and reduction of interest over all.

[Bades]

The idea behind it is that it forces you to pay those extra few payments a year than if you were to do it monthly, we all know this. However not everyone is disciplined enough to say, oh I'll just do it monthly and throw 1/12 towards the principle on top of that too.

Problem is, if you don't pay that extra 1/12 a month for whatever reason, you're already falling behind, and since there are no consequences for not paying that extra 1/12, it's a whole lot easier to slip up!

But if you can budget it and be disciplined about it, then more power to you.