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What are Biweekly Mortgage Payments?

biweekly mortgage payments

Seeing a lump sum of money leaving your bank account each month after making your mortgage payment can be a challenge, especially if it severely limits your cash flow until your next payday. Fortunately, you don’t have to stay married to monthly payments. Biweekly payments can make managing your mortgage easier.

In this article:

What is a biweekly mortgage payment?

A biweekly mortgage payment simply means you’re paying on your mortgage every two weeks, rather than just once a month. You’ll split your minimum payment amount in half and make that half payment on a biweekly basis.

You may be able to set up these payments with your lender or servicer directly, through your bank’s bill-pay service or by independently submitting payments every two weeks using the same method you use for monthly payments.

How to calculate biweekly mortgage payments

To calculate your biweekly mortgage payment amount, you’ll need to first identify your monthly payment amount. You can find this information on your mortgage statement.

Let’s say your monthly payment is $1,300. Divide that amount by two, and you get $650. This is your biweekly mortgage payment amount. If you always pay more than the minimum each month — an extra $100, for example — divide your total payment in half to arrive at your biweekly payment amount. In this case, you’d pay $700 every two weeks instead of $1,400 monthly.

Biweekly mortgage payments vs. monthly payments

Let’s look at an example of a homeowner who just purchased a $300,000 house and made a 20% down payment at closing on a 30-year fixed loan for $240,000 with a 4% interest rate.

Monthly payment (Principal and interest) Biweekly payment
Payment amount $1,145.80 $572.90
Outstanding balance after 5 years $217,074.03 $210,669.81
Repayment term 30 years 25 years, 11 months

 

As the table shows, not only does the homeowner pay down more of their mortgage after five years of making biweekly payments — the outstanding balance is more than $6,000 lower — but they’ll shave off four years from the repayment term if they continue paying biweekly.

That’s because making biweekly payments means you’ll make one extra mortgage payment a year. There are 52 weeks in a year, and paying every two weeks equals 26 half payments — or 13 full payments.

Should you make biweekly mortgage payments?

The benefits of biweekly payments include having an extra payment built into your repayment strategy each year, and the opportunity to get rid of your loan a few years sooner than expected. But there are potential drawbacks to consider as well.

For example, lenders are allowed to hold partial payments in a special account until the full payment is made, according to the Consumer Financial Protection Bureau. If you submit the second half of your monthly payment after your due date and grace period, you could face a late fee.

Other risks include incurring fees if you have to use a third-party service to set up biweekly payments, and, while unlikely, prepayment penalties. Check with your lender about any stipulations they have for paying your loan biweekly.

Alternative ways to pay off your mortgage faster

Aside from making biweekly payments, here are some other strategies to help you get rid of your mortgage sooner:

  • Pay extra on your loan principal each month. Make higher payments each month, perhaps $50 to $200 on top of your minimum payment amount. Be sure to ask your lender to apply the extra payments to your principal, not your interest. This strategy can be combined with biweekly mortgage payments.
  • Refinance and repay the savings. If you’re able to refinance into a new loan with a lower interest rate and monthly payment, take the difference between your old monthly payment and the new one, and apply it toward your principal. You’ll still spend the same amount, but you’ll pay down your principal more quickly and reduce the interest you owe over time.
  • Apply bonuses and tax refunds to your principal. When you receive your tax refund, year-end performance bonus or another windfall, dedicate part or all of those funds to paying down your mortgage.
  • Round up your monthly payments. Try rounding up your monthly payment amount to the next $100, or an amount that you can comfortably afford.
  • Make more room in your budget. Cancel one of your streaming subscriptions, dine out less and, if you have space, consider taking on a roommate to help offset your mortgage payments.

Using a mortgage calculator can help you determine how best to tackle your loan repayment.

 

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