How biweekly payments work
A year has 52 weeks. If you pay half your monthly payment every two weeks, you make 26 half-payments a year, which adds up to 13 full payments instead of 12. That 13th payment goes entirely toward principal, so it shortens the loan the same way any extra payment does.
If your servicer applies each half-payment as soon as it arrives, part of your balance also gets paid down a couple of weeks early, which trims a little more interest. If the servicer holds half-payments until it has a full one, you still get the benefit of the extra payment, just slightly less.
In numbers
On a $350,000 loan at 7% for 30 years, paying $1,164.28 every two weeks instead of $2,328.56 a month adds one extra payment a year. That pays the loan off about 6 years and 4 months sooner and saves about $120,600 in interest.
A worked example
Here is the same $350,000 loan at 7% for 30 years, paid five different ways.
| How you pay | Payment | Paid off after | Total interest | Interest saved |
|---|---|---|---|---|
| Once a month | $2,328.56 | 30 yrs | $488,280 | — |
| Every two weeks, applied on arrival | $1,164.28 | 23 yrs 8 mo | $367,661 | $120,619 |
| Every two weeks, extra sent once a year | $1,164.28 | 24 yrs | $373,311 | $114,969 |
| Monthly, plus $194.05 extra | $2,522.61 | 23 yrs 9 mo | $368,784 | $119,496 |
| Twice a month (semi-monthly) | $1,164.28 | About 30 yrs | About $488,280 | Little or none |
Adding one-twelfth of your payment ($194.05 here) to each monthly payment lands within a month of true biweekly payments. Paying twice a month on fixed dates doesn't help much, because 24 half-payments only add up to 12 full payments.
Figures use this calculator's method (described below) and are rounded to the nearest dollar.
Biweekly, twice a month, or one extra payment?
These three get mixed up a lot, and only two of them save you money.
- Every two weeks (biweekly). 26 half-payments a year, or 13 full payments. It fits nicely if you're paid every other week.
- Twice a month (semi-monthly). 24 half-payments a year, or 12 full payments. You make no extra payment, so the savings are close to zero.
- One extra payment a year. Either one-twelfth extra each month or one full payment once a year. The result is nearly the same as biweekly, and it works with any servicer.
Are paid biweekly programs worth it?
Some companies, and some lenders, sell programs that withdraw half your payment from your bank account every two weeks. Some charge a setup fee, a fee on each withdrawal, or both. Some also hold your money and pay your servicer once a month, sending the extra payment once a year, which saves a little less than true biweekly payments.
In the example above, a program charging $300 to start and $2.50 per withdrawal would cost about $1,843 over the life of the loan, cutting the net saving to about $118,776. Adding $194.05 to each monthly payment yourself saves $119,496 and costs nothing. Enter a program's fees in the calculator to see the difference for your loan.
Before signing up for any program, ask:
- What are all the fees, including setup, per withdrawal and cancellation?
- When does the money reach my servicer, and is the extra applied to principal?
- Where is my money held between withdrawals?
- Can I stop at any time, and how?
How to set up biweekly payments yourself
- Ask your servicer first. Some accept biweekly payments directly and apply each one when it arrives, sometimes at no charge.
- Ask how partial payments are handled. Some servicers hold a half-payment in a separate account until a full payment arrives. That works, but it saves slightly less.
- No biweekly option? Add one-twelfth of your payment to each monthly payment and mark it as additional principal. You can model any extra amount with the mortgage payoff calculator.
- Prefer a once-a-year habit? Send one extra full payment each year, for example from a tax refund.
- Automate it. A transfer on each payday keeps the money set aside so the extra payment is there when you need it.
How this calculator works
The regular monthly payment comes from the standard formula for a fixed-rate loan, using your balance, rate and years left. Then the calculator compares three schedules:
- Applied on arrival. Half the monthly payment is paid every 14 days, starting on the 1st of the month you choose. Interest for each two-week period is the balance times the annual rate divided by 26.
- Extra sent once a year. Regular monthly payments, plus one extra full payment after every 12 monthly payments.
- Monthly plus one-twelfth. Regular monthly payments, each with one-twelfth of the payment added toward principal.
A setup fee is counted once. A per-withdrawal fee is counted on every biweekly withdrawal. Results cover principal and interest only. Your servicer may calculate interest differently, so treat the results as close estimates.
Questions people ask
How much does paying biweekly save?
It depends on your balance, rate and years left. On a $350,000 loan at 7% over 30 years, biweekly payments save about $120,000 in interest and cut more than six years off the loan. The savings are larger on bigger balances, higher rates and newer loans.
Is biweekly the same as paying twice a month?
No. Biweekly means every two weeks, which gives you 26 half-payments, or 13 full payments, a year. Twice a month gives you 24 half-payments, which is still 12 full payments, so there is no extra payment and little or no saving.
Can I add a little to each monthly payment instead?
Yes. Adding one-twelfth of your monthly payment to each payment, marked as additional principal, gets almost the same result as biweekly payments and works with any servicer.
Will my lender accept biweekly payments?
Some servicers do and some don't. Ask whether they accept them, whether there is a fee, and whether each half-payment is applied when it arrives or held until a full payment comes in.
Are biweekly mortgage programs worth the fees?
Usually you can get the same result for free by adding extra to your monthly payment or making one extra payment a year. A paid program can still help if automatic withdrawals are the only way you'd stick with it. Compare the total fees with the savings using the calculator.
Does paying biweekly lower my monthly payment?
No. You pay a bit more over the year, the equivalent of one extra monthly payment, and the loan ends sooner. Each withdrawal is half the size, which some people find easier to fit around paychecks.
Can biweekly payments help me get rid of PMI sooner?
Yes. Paying down principal faster can bring your balance to 80% of your home's original value sooner, which is when you can ask to cancel PMI. The PMI removal calculator shows that date for your loan.
