The Complete Guide to Biweekly Mortgage Payments
Paying off a mortgage is a marathon, not a sprint. But what if you could cross the finish line years early without feeling like you're sprinting? That is the power of biweekly mortgage payments.
Most homeowners pay their mortgage once a month, totaling 12 payments a year. However, by simply splitting that payment in half and paying it every two weeks, you can trick the calendar into helping you become debt-free faster. Our biweekly mortgage calculator shows you exactly how much interest you can save and how many years you can shave off your loan.
How Biweekly Payments Work
The concept is simple but effective. There are 52 weeks in a year. If you pay once a month, you make 12 payments.
If you pay every two weeks (biweekly), you make 26 payments (52 weeks ÷ 2).
Let's Look at the Math
Assume your monthly Principal & Interest payment is $2,000.
- Monthly Schedule: $2,000 × 12 = $24,000 per year.
- Biweekly Schedule: $1,000 × 26 = $26,000 per year.
Difference: $2,000 (Exactly one extra month's payment!)
That extra $2,000 goes 100% toward your principal balance. It doesn't go to interest. By consistently knocking down the principal, you reduce the balance that interest is calculated on for the following month. This creates a compounding effect that accelerates your payoff.
Benefits of Switching to Biweekly
1. Massive Interest Savings
On a typical $300,000 loan at 6% interest, switching to biweekly payments can save you over $60,000 in total interest over the life of the loan. That is money that stays in your pocket instead of going to the bank.
2. Pay Off Your Home Faster
Biweekly payments typically shorten a 30-year mortgage term to about 24 or 25 years. Imagine owning your home free and clear 5 years early—that's 5 years of no mortgage payments that you can use for retirement, college tuition, or travel.
3. Easier Budgeting
If you get paid every two weeks (like many US employees), biweekly mortgage payments align perfectly with your paycheck. You simply dedicate a portion of every check to housing, smoothing out your cash flow.
How to Set Up Biweekly Payments
There are two main ways to start a biweekly schedule:
1. The Official Route (Lender)
Contact your loan servicer and ask if they have a biweekly auto-draft program. They will automatically withdraw half your payment every two weeks.
Warning: Some lenders charge setup fees ($200-$400) or monthly processing fees.
2. The DIY Route (Recommended)
You don't need permission to pay extra. Simply calculate one month's payment, divide by 12, and add that amount to your monthly payment as "Principal Only."
Benefit: No fees and you maintain full control.
Potential Downsides to Watch For
- Third-Party Scams: Avoid third-party companies that promise to set up biweekly payments for a fee. You can do this yourself for free.
- Prepayment Penalties: While rare in modern mortgages, check your loan documents to ensure you won't be penalized for paying off the loan early.
- Opportunity Cost: If your mortgage interest rate is very low (e.g., 3%), you might earn a higher return by investing that extra money in the stock market or a high-yield savings account instead of paying down cheap debt.
Is Biweekly Right for You?
If you have a stable income, no high-interest credit card debt, and plan to stay in your home for the long haul, switching to biweekly payments is a "no-brainer" financial move. Use the calculator above to see your specific savings potential today.