Simple Interest Bi-Weekly Mortgage

DEFINITION of 'Simple Interest Bi-Weekly Mortgage'

A bi-weekly mortgage payment plan in which the payments made by the borrower are applied immediately toward the remaining principal balance of the mortgage as they are received. This differs from a traditional bi-weekly plan, where the first payment received during a month is held by the servicer of the mortgage until the second payment for that month is received; only then is the sum of the two payments is applied toward the remaining principal balance of the mortgage.

BREAKING DOWN 'Simple Interest Bi-Weekly Mortgage'

A simple interest bi-weekly mortgage plan creates greater interest savings than a bi-weekly plan where two payments are first received before any amount is applied toward the remaining principal balance of the mortgage. Under a simple interest bi-weekly plan, when the first payment is immediately applied toward the principal balance, interest is no longer charged on that part of the principal balance as it would have been had the payment been held until the second payment in the month arrives.

RELATED TERMS
  1. Biweekly Mortgage

    A mortgage with principal and interest payments due every two ...
  2. CMG Plan

    A mortgage plan in which a borrower's mortgage is structured ...
  3. Interest Due

    The portion of a current mortgage payment that is comprised of ...
  4. Mortgage Accelerator

    A type of mortgage loan program popular in the United Kingdom ...
  5. Simple Interest

    A quick method of calculating the interest charge on a loan. ...
  6. Negative Amortization

    An increase in the principal balance of a loan caused by making ...
Related Articles
  1. Home & Auto

    Is Making Biweekly Mortgage Payments A Good Idea?

    Some people believe making mortgage payments every two weeks, as opposed to once a month, can chop years off of a home loan. But is it really a good idea?
  2. Budgeting

    Is Making Biweekly Mortgage Payments A Good Idea?

    Do you think making two payments a month for your mortgage is a good idea? Think twice about that. We tell you why.
  3. Credit & Loans

    Understanding the Mortgage Payment Structure

    We explain the calculation and payment process as well as the amortization schedule of home loans.
  4. Real Estate

    Best 3 Mortgage Calculator Websites for Canadian Residents

    Understand the key features of Canadian mortgages, and discover a few of the best online mortgage calculators for Canadian home loans.
  5. Options & Futures

    Be Mortgage-Free Faster

    Getting rid of this debt faster has bigger benefits than you might think.
  6. Home & Auto

    Understanding The Mortgage Payment Structure

    While a mortgage’s size and term set the baseline, the interest, taxes and insurance all influence the amount of the monthly payment.
  7. Credit & Loans

    Mortgage Basics: The Amortization Schedule

    By Lisa SmithThe amortization schedule for a residential mortgage is a table that provides a breakdown of the schedule of payments from the loan's first required payment to the loan's final payment. ...
  8. Home & Auto

    Choose Your Monthly Mortgage Payments

    Exotic mortgages allow you to decide how much to pay. Find out how much they really cost.
  9. Credit & Loans

    How Interest Rates Work On A Mortgage

    A step-by-step explanation of the interest calculations, mortgage types, and how the loan is eventually "retired" – which means paid off.
  10. Real Estate

    Best 3 Mortgage Calculator Websites without PMI

    Discover the three best mortgage calculator websites online that do not require you to factor private mortgage insurance (PMI) into your payments.
RELATED FAQS
  1. Why does the majority of my mortgage payment start out as interest and gradually ...

    When you make a mortgage payment, the amount paid is a combination of an interest charge and principal repayment. Over the ... Read Answer >>
  2. What are the best ways to pay off my mortgage quickly?

    Learn how mortgage payments may be reduced and how to save thousands on mortgage loans by lowering the interest and principle ... Read Answer >>
  3. Is there any limit on how much I can pay toward my mortgage principal every month?

    I understand that I'll be paying more interest and less principal for almost the first half of my mortgage term. I'm ... Read Answer >>
  4. I've come into a large amount of money. Should I invest it or pay off my mortgage?

    There is no simple answer to this question as it depends on a number of key factors, namely the aspects or criteria of your ... Read Answer >>
  5. How can I avoid paying private mortgage insurance (PMI)?

    Private mortgage insurance (PMI) is an insurance policy that protects lenders from the risk of default and foreclosure, and ... Read Answer >>
  6. How accurate are online mortgage calculators?

    Discover how to use online mortgage calculators to get an accurate estimate for monthly payments and what inputs are necessary ... Read Answer >>
Hot Definitions
  1. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  2. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  3. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  4. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  5. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  6. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
Trading Center