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When you set up your mortgage payment repayment plan, you can choose between a standard repayment plan or a bi-weekly repayment plan. With the standard plan, it would take you 30 years to repay the loan while a biweekly plan will take 24 years and 6 months. This will save you 5 years and 6 months. But, the savings doesn’t end there. If you took out a $120,000.00 loan with an interest rate of 6.000% and your federal tax rate is 26.000%, you can expect to pay $719.46 per month, while a bi-weekly payment plan will call for a payment of $359.73 every other week. As a result, you will pay only $108,838.99 in interest with the bi-weekly schedule rather than $139,005.83 with the standard payment plan. While this will result in a loss of $7,843.38 in tax benefits, you will still save a total of $22,323.46 with the bi-weekly plan.
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