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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 $400,000.00 loan with an interest rate of 6.000% and your federal tax rate is 26.000%, you can expect to pay $2,398.20 per month, while a bi-weekly payment plan will call for a payment of $1,199.10 every other week. As a result, you will pay only $362,796.64 in interest with the bi-weekly schedule rather than $463,352.76 with the standard payment plan. While this will result in a loss of $26,144.59 in tax benefits, you will still save a total of $74,411.53 with the bi-weekly plan.