The Low Down About Biweekly Mortgage Payments

The emergence of biweekly mortgage payments needs a better understanding. Primarily, when we talk about mortgage, we usually pay for it monthly. The typical mortgage is prepared so that you can have only one mode of payment each month for a sum of twelve months every year.

The smart thing about this kind of financial credit is that you have a fix amount to pay each month so you won’t be surprised about any payment changes and it’s easy to consider in your budget. But there is a good suggestion in order to give you a more intelligent way of paying your mortgage. Why not split up the monthly obligation and make it biweekly payments?

Amazingly, you could save tens of thousands of dollars for yourself and cut the long years off of your financial loan. Here’s how to do it.

The Magic of Biweekly Mortgage Payments

What’s wonderful about biweekly payments is the fact that there’s a 52 weeks in an entire year, therefore you’d have 26 total of payments. If you simplify these payments twice a month that would mean 24 payments in one year, so in reality the bi-weekly system gives you two extra payments each year. In short, it’s just the same us making one additional payment monthly. So how does it work, to be more specific? Here’s an example.

For instance, your present monthly payment for your mortgage is $1,000. In an entire year, you will pay out on twelve months of $12,000. If you make a decision to pay it biweekly, you turn the amount into $500 payment each 2 weeks. That’s counting the same, am I correct?

Well, if you multiply $500 to 26 payments you get a total payments of $13,000. The surprising thing is, that extra amount of $1,000 was directly applied to your principal, which means trimming down the amount you’ll spend on the interest and will complete your mortgage obligation faster.

To gain better understanding about genuine savings, on a 30-year mortgage of an amount $100,000 at 6.5% you’ll pay an interest of $127, 544 plus the principal $100,000, total of $227,544. Guess what? If you switch on to biweekly mortgage payments,it will result to $97,215 in interest, $30,329 amount of savings. Apparently, the bigger your mortgage, the interest rate will be higher also, and of course, greater savings.

Things to Consider in Making Biweekly Mortgage Payments

In a clear perspective, biweekly mortgage payments get the idea of dividing your monthly obligation in half and paying it every two weeks. But it’s not as simple as that. Though that is the general concept, you should check your lender first before taking the first step. Maybe, you have already established an automatic mode of payment and you want to ensure to stop that. Or else you might discover yourself even more burdened by additional payments.

Another thing, check out your lender whether they accept biweekly mortgage payments or not. While most financial lenders allow this mode of payment, others will not, or if they do, the extra payment might not be automatically applied to the principal. Look for a lender who will credit each biweekly payment upon receipt. If it happens that your lender credits your loan only if the second payment arrives, you won’t see the benefits.

Lastly, make sure that there is no penalty when you prepay your mortgage. These days, most mortgages don’t have a prepayment penalty, however there are still lending companies out there that will give you prepayment penalty if you try to pay off your mortgage early. It’s a sad reality, but true. Therefore, just be sure to avoid obtaining more burden than benefits by attempting to make additional payments.

What to Look out for When Making Biweekly Mortgage Payments

Paying your mortgage on biweekly basis is a very useful way for loaners, but you must be watchful of special programs or scams that claim they can do the process for you. There are some companies offering this kind of program, yet converting your monthly mortgage payment to even more extra payments. Avoid these unreliable offers.

Biweekly payments should not cost you anything to add up extra cash on your financial loan. It pays to become careful in money matters especially when paying biweekly mortgage payments.

Do you have a poor credit payment history? Have you ever been declared bankrupt? If your answer is yes let me tell you that there is no denying the fact that you have bad credit score. This score might not bother you now but think for a while about its seriousness. Won’t it deteriorate your credit worthiness affecting future borrowings? Obviously, it will.

The UAE has always remained the most hot real estate investment spot for foreigners. With current prices of properties in Dubai and the UAE touching bottom level so it is the best time to invest in Dubai for foreigners as it is nothing less than a paradise. Though, the UAE banks have slashed mortgage rates to facilitate buyers and kick-start recovery in the market yet the lending criteria of banks is still stringent. This is because banks do not want to go on building a portfolio of non-performing loans, which was once the root factor of Dubai real estate collapse.

Banks in the UAE are currently selective in mortgage lending. If you have a poor credit profile, securing a mortgage in the UAE can be quite challenging for you. However, there are still a large number of banks in the UAE, which can offer you mortgages if you have a stable source of income and are ready to meet your financial obligations on time from now onwards. To get yourself approved despite the stigma of bad credit history is challenging but not impossible. All you need to do is to be careful and show some sense of responsibility.

Improve your credit profile

Just like DNA gives you a physical identity, credit report gives you a financial indentify. Before securing any mortgage, always analyse and evaluate your credit score to know how bad your credit worthiness is. Mostly, if your credit score is above 620, you can secure a mortgage with certain terms and conditions. However, if your score is quite lower than that, you must plan to improve it before asking for a mortgage.

You can improve your credit score by making some of your accounts current and paying your credit cards bills and other loans on time. You can allocate greater amount to repay your other loans from your monthly budget to show small outstanding loan amounts in the report. If you have secured a revolving credit, try to keep it at the lowest percentage and strictly decide to pay as much credit as you can on time.

Select right mortgage product

Mostly banks in Dubai, in order to lower their risk, charge higher rate of interests on bad credit loans as compared to other loans. Some banks require you to pay bigger amounts resulting in early retirement of debt. Beware of the fact that though you will be required to pay more interest rate on mortgage yet this interest rate varies with your credit score. You must identify your credit score and then decide under which bracket of interest rate you fall.

This is because many banks often charge very high interest rates on bad credit loans in spite of your decent credit score. Decide a bank and then check out all of its mortgage products to know which one suits you the best. Even if your credit score is poor, try to improve it so that you may pay moderately higher interest rate than a mortgage meant for people who have good credit worthiness.