Biweekly Mortgage Payments: The Math Behind the Extra Payment
Paying half your mortgage every two weeks adds up to one extra monthly payment a year. On a typical 30-year loan, that can cut years off the term. Here is the calculation and the catches.
The idea sounds like a trick: instead of paying your mortgage once a month, pay half of it every two weeks. There are 52 weeks in a year, so you make 26 half-payments, which equals 13 full payments instead of 12. That one extra payment a year goes straight to principal.
The numbers
Using a hypothetical $350,000, 30-year fixed loan at 6.5% with a monthly payment of $2,212.24, and assuming the extra money is applied to principal as it accumulates:
| Monthly payments | Biweekly equivalent | |
|---|---|---|
| Time to pay off | 360 months (30 years) | about 290 months (24 years, 2 months) |
| Total interest | about $446,406 | about $344,607 |
| Interest saved | about $101,799 |
Show the numbers behind this chart
| Total interest | |
|---|---|
| Standard monthly | $446,406 |
| Biweekly (13 payments/yr) | $344,607 |
That is nearly six years shaved off and about $100,000 less interest, from paying an extra $2,212 a year, roughly $184 a month.
Why it works
There is nothing special about the two-week schedule itself. The saving comes entirely from the extra principal. Because early mortgage payments are mostly interest (see our article on mortgage amortization), extra principal early in the loan stops a long stream of future interest.
You can get nearly the same result by adding one-twelfth of a payment to principal every month, or by making one extra payment a year.
The catches
Not every servicer accepts half payments. Some hold partial payments in a suspense account until a full payment arrives, which means the money isn't reducing principal in between. Ask how your servicer handles it.
Third-party biweekly programs may charge fees. Some companies offer to manage biweekly payments for a setup fee or per-payment charge. The same result is usually available for free by adding extra principal yourself.
Extra payments must be labeled. When paying extra, specify that it applies to principal. Otherwise it may be applied to the next month's payment.
Check for prepayment penalties. Most standard residential mortgages today do not have them, but confirm in your loan documents.
Consider the alternatives. Money sent to the mortgage is not available for emergencies, and it earns a return equal to your mortgage rate. Paying off higher-rate debt, building an emergency fund, or capturing an employer retirement match may come first for many households.
The takeaway
Biweekly payments work because they add one extra payment a year to principal. You can usually get the same benefit with no fees by adding a little to each monthly payment, labeled as principal. Whether that is the best use of the money depends on your rate and your other priorities.
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