Biweekly mortgage calculator

How do biweekly mortgage payments save money?

Paying half the monthly payment every two weeks makes 26 half-payments a year — 13 full payments instead of 12. The extra payment goes to principal, so the loan ends sooner and costs less interest.

How much can I save?

On $300,000 at 6.5% for 30 years ($1,896.20 a month), paying $948.10 every two weeks pays the loan off in about 24 years 2 months and saves about $87,000 in interest.

Do I need a biweekly program?

Not necessarily. The CFPB notes that some servicers charge fees for biweekly plans, and that you may reach the same goal without a fee by making one extra monthly payment a year. Check for a prepayment penalty first.

How does the calculator model it?

As one extra payment a year, spread as an extra 1/12 of the payment each month. Real results depend on how your servicer applies the money.

Is it the same as paying twice a month?

No — twice a month is 24 half-payments a year, the same as 12 monthly payments. The saving comes from the 26th and 27th weeks.

How much extra is that per month if I do it myself?

One extra payment a year is the same as adding one twelfth of the payment to every monthly payment. On the $350,000 loan at 6.75% for 30 years, the payment is $2,270.09, so the extra is about $189.17 a month.

Does the saving depend on the interest rate?

Yes. The higher the rate, the more interest the extra payment avoids. On the same $350,000 and 30 years, the interest saved is $38,964 at 4%, $101,799 at 6.5% and $160,678 at 8%.

Why can my real payoff date differ from the calculator?

The model starts from a loan with its first payment after one month, and treats the biweekly plan as a monthly schedule with an extra twelfth added. A real plan starts on a calendar date, so the exact payoff month can differ by a few payments.

How the calculation works

A year has 52 weeks, so a payment every two weeks happens 26 times, and 26 half-payments equal 13 monthly payments. That is one extra monthly payment a year. The calculator compares two payoff schedules for the same loan: the regular one with the standard monthly payment, and one in which the payment is 13/12 of that amount each month, which has the same yearly total as the biweekly plan. Each month it charges interest on the balance at the monthly rate, applies the rest of the payment to principal, and repeats until the balance is zero. The saving is the difference in total interest, and the time saved is the difference in the number of payments.

Worked example

Take a $350,000 loan at 6.75% for 30 years. The monthly payment is $2,270.09, and the biweekly payment is half of that, $1,135.05. On the regular schedule the loan takes 30 years and costs $467,234 in interest. With the biweekly plan it is paid off in 24 years, with $356,822 in interest. That saves $110,411 and shortens the loan by 6 years.

Common mistakes

• Assuming half-payments are applied right away. A 2015 CFPB consent order describes a third-party biweekly program that held the money in a custodial account until the monthly due date, so the loan was not paid down any faster in the meantime. Ask how and when payments are applied before you enroll.
• Paying a fee for something you can do yourself. The CFPB notes that some servicers charge for biweekly plans, while an extra principal payment each month or year reaches the same result.
• Comparing with the wrong schedule. The saving depends on the starting balance, rate and term. Use your own numbers instead of rules of thumb.

Sources and related calculators

Method: the standard fixed-rate amortization formula applied to a schedule with one extra payment a year; the notes on servicer fees and prepayment penalties are from the Consumer Financial Protection Bureau's mortgage key terms page, and the custodial-account example is from its 2015 consent order with Nationwide Biweekly Administration. Related: mortgage calculator, amortization calculator and loan payoff calculator.

Estimates for planning only — not financial or tax advice. Your lender, plan or tax professional decides. How we check our calculators.