What Are Biweekly Payments?

When homeowners apply for a mortgage to finance the purchase of their home, they usually pay their lenders back in monthly payments until the mortgage is paid off. On a monthly payment term, a borrower would make 12 monthly payments each year. A biweekly payment is a type of mortgage payment where borrowers pay their lenders back on a biweekly basis. Each biweekly payment is half the amount of the monthly payment. The main reason borrowers choose biweekly payments over monthly payments is that biweekly payments allow them to pay off their mortgage earlier and hence save a lot of money on interest payments over the years. To learn more about other types of extra payments, visit the extra payment mortgage calculator.

How Do Bi-Weekly Payments Work?

Bi-Weekly payments are mortgages that are paid every other week and the payment is half of the monthly payment. Notice there is a big difference between paying twice a month and bi-weekly payments. When you are making payments twice a month, you will be making 24 payments a year. However, there are 52 weeks in a year, if you are making biweekly payments, you will end up making 26 payments a year. Basically, borrowers will be making an additional payment with a bi-weekly payment plan than the normal monthly payment. Do not underestimate the one extra payment a year for your mortgage, because it can save you thousands of dollars in interest payments and may pay off your mortgage a few years ahead of the regular monthly payment.

How much faster do you pay off a mortgage with biweekly payments?

Let's do some math. If you take out a mortgage of $400,000 on a 5% interest and a 30 year term, you will be paying about $373,023.14 in total interest paid on a monthly payment schedule. With the biweekly payment plan, you will be paying about $304,367.27, which is $68,655.87 less than the monthly payments option. On top of that, you will pay off your mortgage almost 5 years earlier with bi-weekly payments. We haven't even factored in taxes and insurance, PMI, and other fees. If we include all these fees in our calculation, the savings could get much bigger with bi-weekly payments.

Should You Make Biweekly Mortgage Payments?

By default, most mortgages are paid on a monthly basis. At the beginning of the mortgage, borrowers will be making payments mostly towards interest and not so much on principal. As time passes by, you will slowly cut down your principal and that's when interest payments get smaller, and principal payments get bigger. In terms of house mortgage payments, the longer the terms, the more interest you will be paying. For instance, if you get a mortgage of $300,000 on a 30 year term with a 5% interest rate, you will end up paying about $279,767.35 in interest payments. When you add taxes and insurance, PMI to the equation, your interest payments get larger. To pay off mortgages faster and save on interest payments, many borrowers choose biweekly payments over monthly payments. However, there are advantages and disadvantages to making biweekly payments, you will have to decide whether biweekly payment is a good option for you.

Is Bi-Weekly Payments Right For You?

Are there any disadvantages or things to be aware of?

• Are you planning to stay at the house long enough?
  Most savings of bi-weekly payments are realized after a decade and a half. If you are only planning to stay in the house for a few years, then the savings is not worth the extra effort.
  
  
• Can you afford the bi-weekly option?
  Making bi-weekly payments means you need to have extra savings because you will be paying a little more on mortgages each month.
  
  
• Do you have other better investment opportunities?
  Bi-weekly payments may tie your capital from your other investments. If you have other better investment opportunities, you may need to reconsider.
  
  
• Do you have other debts with a higher interest rate? If you have any other debt with a higher interest rate, you should pay off those debts first. The mortgage interest rate is usually much lower than the APR on your credit card. Therefore, you will lose money to make biweekly payments and have a recurring balance on your credit card bill.
  
  

Things to Watch Out For Bi-Weekly Payments

Some lenders may charge extra fees for bi-weekly payments or switching fees if you are already on a monthly mortgage payment schedule. Please check with your lender and make sure there are no fees with bi-weekly payments or if the fees are reasonable for you. In addition, you need to make sure that the extra payment is made towards the principal, and not interest.

How to Use Our Bi-Weekly Mortgage Calculator

Our bi-weekly mortgage calculator helps you to quickly calculate the biweekly payment for your mortgage. You will see exactly how much you will save in interest payments when you use bi-weekly payments vs. monthly payments. The biweekly payment calculator has the option to include PMI, property tax, and home insurance, which will make the interest savings even bigger. Following is a list of options that the biweekly mortgage calculator plus extra payments includes, some of them are optional fields. Payment Frequency - Monthly & Bi-weekly, not only can you calculate bi-weekly, but you can also calculate mortgage payments monthly. Home Value - This is the estimated value of your home or property. Down Payment - It is the amount that you put down, you can express this as a dollar amount of a percentage of the home property. Mortgage Amount - After putting down your initial down payment, this is the mortgage amount that is needed to pay for the house. Loan Terms - Loan terms for your mortgage. You can express the loan terms as years or months. Interest Rate - Interest rate for your mortgage. PMI (Yearly) - If your down payment is less than 20%, you are required to pay private mortgage insurance or (PMI). You can express this as a dollar amount or a percentage. Property Tax - This is the property tax that you need to pay for the house each year. You can enter a dollar amount or as a percentage of your property. Home Insurance - This is the home insurance that you need to buy for your house in case of flooding or fire. It varies depending on where you live. You can express this as a percentage or dollar amount. HOA Fees - If there are any HOA fees that you need to pay on a monthly basis. First Payment Date - You can choose your first payment date if it doesn't start today. Amortization Schedule - You can view your amortization schedule monthly or yearly. The amortization schedule is printable in pdf and excel format. Extra Payments - You can choose to make extra payments so that you can speed up your mortgage payments. There are four types of extra payments that you can make, one-time, biweekly, quarterly, or yearly.

Biweekly Mortgage Payment FAQs

How many years is 130 biweekly payments?

5 years is 130 biweekly payments. There are 26 biweekly payments in 1 year, and since 130 divided by 26 equals 5, that means 130 biweekly payments equals 5 years worth of mortgage payments.

You can pay off a 30 year mortgage 5-6 years faster with biweekly payments.

How much faster do you pay off a 20 year mortgage with biweekly payments?

You can pay off a 20 year mortgage 2-3 years faster with biweekly payments.

How much faster do you pay off a 15-year mortgage with biweekly payments?

You can pay off a 15 year mortgage 1-2 years faster with biweekly payments.