In an effort to make life a little easier for its mortgage customers, Chase has launched a new suite of “flexible automatic payments,” including a biweekly option.
If you happen to have a home loan serviced by the banking giant, you should receive information regarding the new payment options, all of which are free.
Chase now provides customers with three payment options that are automatically deducted either once a month, twice a month, or every two weeks.
That last option is a biweekly setup, with 26 half payments resulting in 13 total monthly payments annually.
Customers can also continue to make payments manually as well.
If you had been interested in a biweekly payment program, you can now do it hassle-free thanks to this change.
You can also choose to make payments automatically and/or split your monthly payment into two to correspond with a paycheck.
Once a month option: Choose any date within your mortgage payment grace period and monthly payment is automatically deducted.
Twice a month option: Split your mortgage payment into two to be withdrawn twice monthly, paid once the total amount due is remitted.
Every two weeks option: Make half a mortgage payment every two weeks, funds applied once total monthly payment collected. Results in at least two extra half payments annually with extra applied to principal.
The first two options just allow borrowers to make automatic payments, which can be handy to avoid missing a mortgage payment.
But neither actually save the borrower any money. If anything, option number two could technically cost you money because you’re effectively parting with half your monthly mortgage payment early each month.
While perhaps splitting hairs, that money could be earning interest elsewhere during that time.
However, the third option does result in savings because it’s a biweekly mortgage payment setup.
Because half-payments are made every two weeks, that results in 26 half payments, or 13 full payments, annually.
The additional amount collected is automatically applied to the outstanding principal balance, providing both interest savings and a quicker payoff.
Note that the twice a month and every two weeks payment options may not be available for all loan types.
Chase provides an example of the potential savings on a hypothetical $250,000 30-year fixed loan set at 4.5% with escrowed taxes/insurance of $475 per month.
Paying $1,742 once a month results in:
Loan paid off in 30 years
Total interest of $206,016
Paying $871 twice a month results in:
Loan paid off in 30 years
Total interest of $206,016
Paying $871 every two weeks results in:
Loan paid off in 24.5 years
Total interest of $162,094
As you can see, the savings can be pretty tremendous over the course of a couple decades if you elect to take them up on the biweekly option.
The loan would be paid off roughly 5.5 years early and the borrower would realize nearly $44,000 in interest savings.
If your home loan is with a different servicer, be sure to inquire about similar payment options if you’re interested in paying off your mortgage early.
Some may offer similar programs free of charge, while others might do the same in exchange for fees (potentially a setup charge and monthly costs).
It’s also possible to set up your own free biweekly mortgage payment schedule, though you do have to ensure that servicer accepts partial payments and applies them properly, with any excess going toward the principal balance.
Good to see a big lender like Chase being proactive and offering these payment options to their customers.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.
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