Which payment method usually offers lower total interest over the mortgage term?

Choosing bi-weekly payments for a mortgage typically results in lower total interest paid over the term of the loan. This is because bi-weekly payments involve making half of a monthly payment every two weeks. As a result, there are 26 half-payments made in a year, which equates to 13 full monthly payments instead of the standard 12.

This extra payment reduces the principal balance more quickly than monthly payments, leading to a reduction in the overall interest accrued over the life of the mortgage. The more frequently you make payments, the less interest you will pay because interest is calculated on the remaining balance. By consistently reducing the principal, you ultimately save money.

While weekly payments may also lower total interest, they can sometimes result in smaller amounts being paid, which may not always lead to a significant reduction compared to bi-weekly options. Monthly payments, although straightforward, typically result in paying more interest due to the longer intervals between payments. Interest-only payments do not contribute to principal reduction, significantly increasing the total interest paid over time.