I think this works if and only if the interest on your mortgage is compounded daily.
It’s the miracle of compound interest. The more frequent the period of compounding, the greater the debt (or investment) becomes.
Splitting your payment into smaller, more frequent chunks is the same concept. You are mowing down that daily compounding interest more frequently so it can’t feed off itself as much. So, you end up paying less interest.
I don’t think this would work on a monthly compounding loan.
Edit:
Here’s a good link- paying bimonthly gets you free and clear one month sooner: http://mortgage-x.com/library/bimonthly.htm
Of course this doesn’t consider the opportunity cost of paying early.
