As its name suggests, the payment on a bi-monthly mortgage has to be made twice each month. However, there are some implications for the total cost of the mortgage, beyond the dates when payments are due. Read on to learn more about what a bi-monthly mortgage payment is, its pros and cons, and what long-term impact it has upon the borrower…

The bi-monthly option shouldn’t be confused with a “bi-weekly” payment plan, which works differently and has a more significant effect. This is because there are twenty-six two week periods in a year (52 weeks / 2 = 26), whereas only twenty-four half month periods exist. People sometimes use the words interchangeably by mistake, which can add to the confusion about this difference.

An advantage of choosing a bi-monthly payment is that, according to Loan.com, the interest cost is slightly reduced and the total length of the mortgage is decreased by about thirty to sixty days. However, the same web site points out that a bi-weekly loan has a much greater impact; it can cut a 30-year term by seven years. Predictably, this produces a more serious savings in interest as well.

A bi-monthly mortgage payment is less convenient for people with unsteady incomes, who may earn more during one-half of the month than the other half. It will also incur a larger cost for postage and checks, while increasing the chance of mistakes or late fees. Just the additional postage during a 30-year term would cost at least $150, so it is best to use an electronic payment system if possible.

The prefix “bi” has two meanings; it can also refer to a mortgage where the payment only has to be made every other month of the year. However, such loans are hard to find. A mortgage of this type would benefit someone who earns substantially more or less income from one month to the next. The payment period of a mortgage (every two weeks, twice per month, or every other month) should be clearly specified.

Bi-monthly mortgage payments have a couple minor advantages, but these are largely offset by its drawbacks - especially if it involves more fees or causes the borrower to make late payments. On the other hand, bi-weekly mortgages offer significant benefits, but they require the borrower to afford two additional payments each year.