One of the major considerations when evaluating a potential real estate investment concerns both the short term as well as long term costs of the acquisition. The interest rate on the property has an impact well beyond the closing and will bi weekly mortgages for rental propertyaffect the cash flow until the loan is retired. Interest is a recurring expense, so it makes sense to retire that note as soon as possible, right?

 

Maybe. You can do all the research you want about whether or not it makes sense to pay extra on the mortgage but any decision will ultimately be made between the real estate investor and financial planner. But if paying down the mortgage does make sense, is it best performed with a bi-weekly loan?

 A bi-weekly mortgage is a repayment plan set up by a third party that collects one-half of a mortgage payment every other week, in essence making 13 mortgage payments per year instead of 12. The effect is knocking off five to seven years depending upon the term of the loan and the marginal change in payment is barely felt by the borrower.

Setting up a bi-weekly plan however usually requires a fee to the bi-monthly service provider. But there’s no need to employ the services of such a company when you can accomplish the very same on your own.

A bi-weekly loan makes 13 payments per year, right? That’s one extra payment. You can achieve the very same result by making one extra payment per year or to make it less noticeable, divide one monthly payment by 12 and add that amount to the regular mortgage payment each month. The result is the very same savings acquired that a bi-weekly plan provides and you don’t have to pay anyone else or use a third party for any purpose. If you’ve decided that paying down your mortgage on your rental property is right for you, then try making one extra payment per year.