Let’s face it, our paychecks and bill due dates never match up nicely. And your mortgage is likely the largest of the bills you pay each month. You can make it easier to stay on track to pay for your house by using a separate bank account for your mortgage.
One of the first things I did when I closed my mortgage was to set up a separate bank account to save money to pay my bill each month. I wanted to avoid scrambling at the end of the month to scrape together the cash to pay my mortgage.
Let’s take a quick look at why this helps and a few tips to make it easier to manage another bank account.
Why using a separate bank account for your mortgage saves you stress
Your mortgage payment is likely the largest bill you need to pay each month. And if you like your house and credit score, paying your mortgage on time is important.
Using a separate bank account for your mortgage keeps the money away from your regular spending money. You won’t accidentally spend your mortgage money if it’s not in your everyday spending account.
By having this money earmarked and separated, you can rest easy you’ll be able to send your payment without having to scrape together the cash.
Tips and considerations when paying your mortgage using a separate bank account
While it sounds simple setup up another bank account to save the money to pay your mortgage, there are a few things you should keep in mind.
Consider opening an account at the same bank as your mortgage, if possible
If the bank holding your mortgage also offers checking and savings accounts, consider opening an account there if you haven’t already.
This may sound a bit controversial because no one really wants another company to deal with, but this can come in handy if there’s a problem with scheduling a payment. Having an account at the same bank as the mortgage makes it easier to send a last-minute payment.
As an alternative, if you’re using another bank to save your mortgage money, also set up that bank account in the mortgage company’s payment system as a backup. Usually, a payment made through the payee’s system will clear faster if you need to send money last minute. Using your regular bill pay will take multiple business days to reach your mortgage if you need to set one up last minute.
No one wants to see a late payment on their credit report.
Before opening a new account, double-check the account minimums and requirements
Some banks have requirements to avoid account fees. You may need to maintain a minimum balance in the account or have a certain amount of money direct deposited each month to qualify for fee waivers.
Being charged fees would completely defeat the purpose of being more responsible for saving money to pay your mortgage easily.
Setup up direct deposit into your mortgage savings account
Check your employer’s payroll options to see if you can divide your paycheck direct deposit across multiple accounts. One of the things you’re trying to avoid is not having the money on hand to make your mortgage payment.
If you can put your savings on autopilot you’re improving the chance of having all the money you need to pay your mortgage when the bill comes due.
I have my direct deposit for my mortgage savings go into the checking account at my bank, and then I move the money into a separate money market account. The extra step allows me to send a bit more money to that bank in addition to the amount to cover my mortgage. I use a payday checklist of savings tasks so it’s now completely routine for me.
Save half of your mortgage amount each paycheck
Saving half the payment each paycheck is my favorite way to take the stress out of the process. Combined with direct deposit into a separate bank account, you’re saving money on autopilot.
Paychecks and bill due dates never match up the way we need them to do. Your bills are not spaced evenly across paychecks either.
Your mortgage is likely the largest bill you need to pay each month. By saving half the payment each paycheck, you’re making it easy to keep your cash flow consistent for the month.
Tip: I use this approach of saving half of a bill per paycheck for all of my bills, not just my mortgage. And for bills, I save a portion each month into a sinking fund.
Wrapping up. How using a separate bank account helps you with your mortgage payments
Setting up a separate account to earmark the money to pay your mortgage helps you have the money on hand when the bill comes due. With a few setup tasks, you can save for and pay your mortgage almost on autopilot. Let’s take the stress of the process!
What other tips do you have for paying your mortgage on time? You can share them below.
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