PmtCalcWhy biweekly payments save money
There are 52 weeks in a year, so a payment every two weeks happens 26 times, not 24. That extra full payment each year goes straight to principal. Paying a little sooner each month also trims interest slightly. Together they typically take four to six years off a 30-year mortgage.
Example
On a $300,000, 30-year loan at 6.5%, the monthly payment is $1,896.20. Paying $948.10 every two weeks pays the loan off in about 24 years and saves roughly $88,000 in interest.
Watch out for fee programs
Some companies charge setup or per-payment fees to run a biweekly plan for you, and some servicers hold each half-payment until a full payment arrives. Both reduce the benefit. You can get almost the same result for free by adding one-twelfth of your payment as extra principal every month.
Frequently asked questions
Is biweekly the same as twice a month?
No. Twice a month is 24 payments a year, the same as 12 monthly payments. Biweekly is 26, which is what creates the savings.
Do I need my lender’s permission?
To have half-payments credited every two weeks, yes: many servicers only apply full payments. You can always pay extra principal yourself without enrolling in anything.
How is this calculated?
Interest accrues each two-week period at the annual rate ÷ 26, and each half-payment is applied when made. Actual savings depend on how your servicer credits payments.
Sources
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