Re: Can I save interest on mortgage by increasing frequency of payments??
ClubMan said:
Not necessarily. Unless you have crunched the numbers and can tell us?
Not in a position to crunch any specific numbers as I have none to work from (in relation to the OP), but speaking from a generic view I'd stand over the comment.
(Edit- for some rough ones the OP can look at the standard loan on the Jeacle calc. 250k, 5%, 30 years. By switching from monthly to bi-weekly (go to settings, then look in summary) payments the term is reduced by 4 years 8 months and a saving of €41,991.48 over the 25 years and 4 months is achieved. Comparing this to (even a small) increase in monthly payments over a long timeframe is a relatively small saving to what can be achieved, IMHO).
It would be a saving in interest resulting from half the monthly payment (unless the op intended to up payments, doubt this given the reply to 2packs suggestion to lower capital) for approx 2 weeks (again, depends on the specific setup the op goes for with the payments but this would be the most logical) from the current interest being paid (~ 4/5%).
I'm not saying it isn't worth going for the bi-monthly payments, infact I encourage it to save interest payments and reduce the capital, but relative to the savings available through reducing the term of the mortgage (relative to the interest savings available, a reduction in term (if the OP can/could manage it) may provide huge savings) and the additional savings available through doing this, the bi-monthly payments shouldn't be the only avenue the OP should consider.