Why biweekly payments pay off faster
There are 26 two-week periods in a year, so paying half the monthly payment every two weeks adds up to 13 monthly payments a year instead of 12. That one extra payment a year goes straight to principal.
The calculator works out your normal monthly payment, halves it, and schedules that half-payment 26 times a year. Each half-payment is charged two weeks of interest, the yearly rate divided by 26, on the balance at the time, and the rest goes to principal. That assumes your lender applies each half-payment as soon as it arrives. The results compare the plan with paying the same loan monthly.
An example
A $320,000 loan at 6.5% for 30 years costs $2,022.62 a month. Paying $1,011.31 every two weeks instead pays it off in about 24 years and 2 months, and saves about $94,000 in interest: about $314,100 in total, against about $408,100 paying monthly.
More examples
A lower rate
The same $320,000 at 5.5% for 30 years is $1,816.92 a month, or $908.46 every two weeks. Biweekly pays it off in 24 years 11 months and saves about $66,400. There’s less interest to save at a lower rate, and the extra payment each year takes a little longer to cut the loan short.
A 15-year loan
On a 15-year loan of $320,000 at 6.5%, the monthly payment is $2,787.54, or $1,393.77 every two weeks. Biweekly finishes in 13 years 2 months, 22 months early, and saves about $25,500. That’s real money, but far less than on the 30-year loan, because a 15-year loan has much less interest in it to begin with.
Biweekly plus a little more
You can add extra to each half-payment too, under “Extra principal every payment”. On the 30-year loan at 6.5%, $100 more with every biweekly payment finishes in 19 years 7 months, with about $246,400 of interest in all.
Biweekly or twice a month?
They sound alike but work differently. Twice a month is 24 payments a year, the 1st and 15th for example, so it's still 12 monthly payments' worth: the same loan paid twice a month is $1,010.87 a payment, still takes 30 years, and saves only about $300 in interest. Biweekly is 26 payments a year, and the extra two half-payments are what pay the loan off years early. Choose either under Payments to see the difference for your loan.
Getting the same result without a biweekly plan
The saving comes from paying more principal, not from the two-week timing. You can get close to it on an ordinary monthly schedule:
- A twelfth extra each month. On the $320,000 loan, $168.55 extra a month (one twelfth of $2,022.62) pays it off in 24 years 2 months and saves about $93,100.
- One extra payment a year. A one-time $2,022.62 with every 12th payment pays it off in 24 years 4 months and saves about $89,600. It saves a little less because the extra arrives at the end of each year rather than through it.
Try either on the extra payment calculator, or pick a payoff date and let the mortgage payoff calculator work out the monthly extra.
Before you sign up for a biweekly plan
- Check your lender applies each half-payment when it arrives. Some hold it until the second half comes in, which loses much of the benefit.
- Avoid third-party biweekly services that charge fees for something you can do yourself.
- Check your loan has no prepayment penalty, since biweekly pays principal faster than scheduled.
- The calculator assumes exactly 26 payments a year. A real calendar occasionally has 27 two-week pay dates in a year, and your lender’s payment dates decide how interest is actually charged.
- The same saving comes from paying one extra monthly payment a year, or a twelfth of a payment extra each month, as shown above.
Common questions
How many payments a year is biweekly?
26 half-payments, which add up to 13 full monthly payments, one more than paying monthly.
Do biweekly payments really save money?
They can, if the lender applies each half-payment when it arrives and doesn’t charge fees. On a $320,000 loan at 6.5% for 30 years, that’s about $94,000 in interest and nearly 6 years.
Is biweekly the same as paying twice a month?
No. Twice a month is 24 payments a year and doesn’t shorten the loan; biweekly is 26 and does.
Can I pay biweekly on an FHA, VA or USDA loan?
The calculator works with any program on a fixed-rate loan. Whether your servicer accepts biweekly payments is up to them, so ask.
Why can’t I choose biweekly for an ARM or interest-only loan?
A biweekly plan halves one fixed monthly payment. When the payment changes over time, or a balloon is due at the end, there’s no single half-payment to use. Twice a month works with any loan type; try the ARM calculator for adjustable rates.