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Biweekly Mortgage Payments: Are They A Good Choice For You?

Lauren Nowacki5-minute read

November 15, 2021

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A mortgage is one of the biggest debts you’ll have in your life. And while you may be tackling your credit debt, car loan or student loans, your mortgage may be a little harder to chip away.

But if you’re motivated, there’s an easy way to make an additional mortgage payment every year.  To do this, switch to biweekly mortgage payments. This effectively means you’ll make an extra payment each year, and pay your mortgage off several years earlier than planned.

Before you hop on the biweekly bandwagon, take a moment to consider if it’s right for you. There are many factors that go into biweekly mortgage payments. It’s important to know what they are and how they can impact your finances before making the switch.

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What Are Biweekly Mortgage Payments?

A biweekly mortgage payment is a mortgage option where, instead of 12 monthly payments every year, you make half a month’s payment every 2 weeks. This method adds an extra month’s payment every year that is applied to your mortgage’s principal, helping you shave years off your mortgage repayment. In fact, it can help you pay off your mortgage early by 6 – 8 years.

How Do Biweekly Mortgage Payments Work?

Biweekly payments are half of your monthly payment paid every 2 weeks. There are 52 weeks in a year, so this works out to 26 biweekly payments. Since these payments are half the full amount of your monthly mortgage, that equates to 13 full payments.

Biweekly mortgage payments don’t save you money by lowering your interest rate. Instead, they save you money on interest by paying your mortgage down – and off – earlier. When you pay your principal balance down faster, there’s less money to charge interest on, which lowers your interest charge. On top of that, when your mortgage is paid off earlier, it shaves off several years’ worth of interest payments. 

The Math Behind Biweekly Mortgage Payments

Here’s how it works, using real numbers.

Interest Savings

Let’s say you purchase a home for $200,000 with a 30-year fixed-rate loan. You put down $40,000 (20%) and have an interest rate of 4%. Your monthly mortgage payment is $764, which pays your principal and interest. If you make monthly payments for the life of the loan, by the time your mortgage is paid off, you’ll have paid a total of $274,991 on the loan, thanks to interest.

Let’s say you decide to make biweekly payments instead. With this payment method, you pay $382 (half your monthly payment) every two weeks. If you make biweekly payments for the life of the loan, once your mortgage is paid off, you will have paid a total of $256,288 on the loan, and you’ll pay off your mortgage in 25 years and nine months (cutting four years and three months of payments off your mortgage).

With biweekly payments, you’ll have total interest savings of $18,703.

Monthly Payment
$764

Biweekly Payment
$382

Total Interest
$114,991

Total Interest
$96,288

Time for Repayment
30 years

Time for Repayment
25 years and 9 months

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Biweekly Vs. Monthly Mortgage Payments

As you can see from the example above, there are a few big differences between biweekly and monthly payments: the number of payments you make, how long it takes to pay off your mortgage and the amount of money you end up paying on the loan.

The number of payments you make each year is the biggest difference because it affects how long and how much you’ll pay. By making an extra payment every year, bi-weekly payments pay off your mortgage faster than monthly payments, which, in turn, saves you more money.

A monthly payment plan allows for 12 full payments each year (one every month). A biweekly plan equates to 13 full payments each year (or 26 biweekly half payments).

Biweekly Vs. Bimonthly Mortgage Payments

Bimonthly mortgage payments could also be an option, but they differ from biweekly payments. That’s because you’re making a payment twice per month, which equates to 24 bimonthly payments, or 12 full payments total – the same amount of payments as the monthly option. You may get paid bimonthly, and it may be more convenient to arrange your automatic payments around that schedule, but it won’t shave time off your mortgage repayment term.

Pros And Cons Of Biweekly Mortgage Payments

Making biweekly payments has its benefits, but there are also disadvantages you should consider. Take a look at your finances and consider these pros and cons before deciding which payment option is right for you.

Pros

  • They can help you pay off a mortgage early by several years.
  • They contribute one extra full payment on your principal balance per year and cut down on accumulating interest.
  • Biweekly payments build up your home equity. And once you have 20% equity in the home, you can drop your PMI payments, saving you more money each month.
  • This payment plan could make personal budgeting easier, especially if you’re paid biweekly for your job.

Cons

  • The extra payment toward your mortgage per year can be tough if you’re on a tight budget already.
  • If you’re living paycheck to paycheck, that extra payment could go to other needs.
  • If you’re used to making monthly payments, you may need to rework your budget and take some time to get used to the new payments.
  • Your mortgage lender may charge a setup fee, as well as transactional fees
  • If your lender doesn’t offer biweekly mortgage payments, third party payment processors may also charge extra fees (more on this below)..
  • Some lenders or processors still only apply your payments once a month, even though you’re paying twice or more a month, which means you won’t make an extra payment after all.
  • Some mortgage lenders have a prepayment penalty, meaning you could get charged for paying your mortgage off early.

Beware Third Party Processors

Thanks to technology, setting up a biweekly mortgage payment should be easily accomplished by visiting your lender’s website. Nonetheless, some lenders use third-party processors who charge a fee for this service.

For Rocket Clients Who’d Like To Switch To Biweekly Payments

It’s easy! Rocket Mortgage clients can now set up biweekly payments for free. This saves you money on interest. Learn more about the mechanics of switching your payment method.

Are There Alternatives To Biweekly Payments That Can Help Me Pay Off My Mortgage Faster?

If you’re not certain you have the financial wherewithal to commit to biweekly payments, you have choices.

Additional Principal-Only Mortgage Payment

You can always commit to saving at a less burdensome pace and making an extra payment when you can. This is known as an additional principal-only mortgage payment. Just make sure you clearly communicate with your lender that the additional payment is to be applied to your principal. Otherwise, it might be applied to your interest or even your escrow account.

A Rate-And-Term Refinance

If you’re a few years into repaying your mortgage, a rate-and-term refinance can help you move from a 30- to a 15-year fixed while lowering your interest rate. It’s a refinance, so there are associated costs, but rate-and-term refinances tend to be less costly than cash-out refinances

The Bottom Line: Biweekly Mortgage Payments Can Be Worth It

Biweekly payments are a mortgage payment option that can allow you to make an extra full payment each year. This can help you pay off your mortgage earlier and reduce the amount you pay in interest in the long run by thousands of dollars.

Want to work toward a debt-free life? Check out our tips for paying off your mortgage early.

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Lauren Nowacki

Lauren Nowacki is a staff writer specializing in personal finance, homeownership and the mortgage industry. She has a B.A. in Communications and has worked as a writer and editor for various publications in Philadelphia, Chicago and Metro Detroit.