Buyers seeking to finance the purchase of a home can choose from a wide range of mortgage products, with varying interest rates, loan terms and repayment options. The most common loan type is the traditional loan. Traditional loans require borrowers to make a down payment and repay the loan balance in equal monthly installments over a specified period of time. There are variations of this type of loan that offer borrowers alternate repayment schedules. One such loan is called the bimonthly mortgage.

The bimonthly mortgage can save the borrower money and shorten the loan repayment period, but it's not for everyone. Borrowers should have a clear understanding of how the bimonthly mortgage works to determine if it is the best option for them.

With bimonthly mortgages, borrowers make mortgage payments twice per month, for a total of 24 payments a year, compared to 12 with a standard repayment plan. However, each payment is equal to half of a single monthly installment payment, so the borrower would pay the same amount annually.

Typically, payments are due on the 1st and 15th of each month. If the lender applies the payments when received, the accrued interest will be lower. Lower interest means a higher portion of each payment will be applied to the principal. Over the life of the loan, this will save the borrower money and accelerate loan repayment. However, the amount of interest saved is marginal, and the loan will be paid off only one or two months sooner than the monthly payment option.

To determine if a bimonthly mortgage is the right choice, borrowers should have a clear understanding of the mortgage terms. First, borrowers need to know how the lender will apply the bimonthly payments. If the payments are applied at the end of the month rather than immediately, the financial benefit of this repayment plan evaporates. Second, in order to avoid missed or late payments, borrowers should ask lenders if they offer an automatic payment option. Third, borrowers should evaluate their own financial situation. If accumulating the funds to meet a larger monthly payment is a challenge, paying a smaller amount twice each month could be an attractive option.

Another option is a biweekly mortgage, which allows borrowers to pay every two weeks, rather than twice a month. Paying exactly every two weeks is equivalent to one extra monthly payment per year, and can help pay off a loan several years faster than a normal monthly payment plan or a bimonthly plan.

Bimonthly mortgages can provide value to borrowers who desire more manageable loan payments. The added benefits of saving money and accelerating repayment make the bimonthly mortgage an appealing option worth considering.