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Most homeowners make their mortgage payments once a month, but unless there’s a prepayment penalty, which is unlikely, you can make small reductions in your outstanding balance more frequently. A biweekly mortgage payment plan lets you pay off your mortgage faster by paying half your regular monthly payment every two weeks.
What are biweekly mortgage payments?
With a biweekly mortgage payment, you pay half of your monthly payment every two weeks instead of paying the full amount every month. This effectively equates to 26 biweekly payments per year, for a total of 13 monthly payments instead of 12. If you check with your lender or servicer, the extra payments can be applied to your loan’s principal balance, helping you pay off your mortgage early and save on interest.
How are biweekly mortgage payments made?
With a biweekly mortgage payment, you pay half a monthly payment every other week, rather than one full payment each month. Because there are 52 weeks in a year, that translates into 26 half payments and 13 full payments per year.
How much can you save by paying biweekly?
Let’s say you put 10 percent down and take out a 30-year fixed-rate mortgage at 7 percent to buy a $350,000 home. Your first mortgage payment would be:
| Monthly payment | Major | interest |
|---|---|---|
| $2,095 | $257.50 | $1,837.50 |
To make this a biweekly payment, you would simply cut your monthly payment of $2,095 in half and pay that $1,047.50 every two weeks.
At this rate, by the end of the year, you’ll have paid $27,235 – $2,095 more than you would have if you’d made one monthly payment – but all of that extra payment will go toward your principal, saving you a lot in interest and over a much shorter repayment period.
| Payment Frequency | Total interest amount | Payment period |
|---|---|---|
| Monthly payments | $439,453 | 30 years |
| Biweekly payments | $327,470 | 23 years |
You can do your own calculations using our Fortnightly Mortgage Payment Calculator.
Pros and Cons of Biweekly Mortgage Payments
The benefits of paying your mortgage every other week
- Long-term savings: The biggest benefit of biweekly mortgage payments is the significant savings you can make on interest. In the example above, you would save over $31,000 in interest over the first 10 years.
- The faster path to fairness: Whether you plan to stay in your home forever or sell before the loan is up, making biweekly payments will help you build more equity. If you stay in your home, you can pay off your loan sooner. Plus, if you’re still living in your home, that equity can also give you lower-cost borrowing options in the form of a mortgage or line of credit.
- Selling will give you a higher net profit: If you sell your home for a profit, you’ll have more of that money left over to pay off your mortgage.
Disadvantages of biweekly mortgage payments
- Potential impact on other savings goals: Before you decide to make biweekly payments on your mortgage, consider whether it would add to your overall financial plan. A biweekly strategy means you put more money toward your mortgage each year, allowing you to pull funds from other financial obligations, like retirement savings. Plus, if you have a lot of high-interest debt (for example, credit card balances with double-digit annual interest rates), it might make more sense to prioritize paying them off. As you evaluate your budget, make sure the savings outweigh any other losses.
- Potential prepayment penalties: Although it’s not common, some mortgages charge a prepayment penalty if the borrower pays off the loan sooner than the repayment schedule requires. Read your loan documents carefully or contact your servicing company to find out if this fee will be charged. (Make sure to keep a record of who you speak to in case you run into problems later.)
- Additional configuration may be required: Because lenders want to earn their share of the interest, it may not be as easy to arrange biweekly payments. Before making any additional payments, contact the servicing company to arrange a payment plan to ensure the additional amount will be applied toward the principal. Again, keep track of who you speak with and make sure you have the conversation in writing.
How to Set Up a Biweekly Mortgage Payment Plan
Contact your mortgage servicing company (this may or may not be your lender – here’s how to check). If your lender allows you to make biweekly payments and applies the extra payment directly to your principal, you only need to send half of your mortgage payment every two weeks. For example, if your monthly payment is $2,000, you could send $1,000 every two weeks.
To ensure your biweekly mortgage payment plan works as intended, here are some things to look out for.
- The lender or servicer allows for mortgage payments to be made every two weeks.
- The additional payment is applied to the loan principal.
- You will not be charged any prepayment penalties or fees for setting up or maintaining a payment plan.
- Your interest rate will remain the same (unless it is an adjustable rate loan).
Finally, keep in mind that your total monthly mortgage payment often includes property taxes and homeowner’s insurance, so be sure to ask your lender if these payments will add to your escrow cushion.
What to consider before switching to biweekly mortgage payments
- What does my savings account look like? Paying off debt fast feels good, but it shouldn’t come at the expense of your emergency fund. The bottom line is, if you’re trying to tap into your savings, don’t push yourself too hard to make a payment every two weeks.
- What other debts are you paying? If you’re paying off a car, student loan, or credit card, consider the interest rates attached to those — you might be better off reducing your other debt to zero before turning your attention to your mortgage.
- What is the interest rate? The higher your mortgage interest rate, the more money you’ll save with your fortnightly payments.
- How long do you plan to stay in the house? If the house isn’t your permanent home and you have other financial goals you’re trying to achieve, paying off your mortgage early may not be a top priority.
- Would it be better to invest the extra cash? Should you get rid of debt and save money, or find good investment opportunities and make money? This is a big question that isn’t always easy to answer. Those with a high risk tolerance and a long-term perspective may choose to invest their money in the stock market. On the other hand, getting rid of mortgage debt may free up space in your budget and reduce the cost of future debt.
Alternative to biweekly mortgage payments
If paying your mortgage every two weeks isn’t a good option for you, but you still want to pay off your mortgage faster, consider these alternatives:
- Round up your monthly payment to the nearest hundred or thousand and pay that amount.
- Use bonuses, tax refunds, or other extra income to make an extra lump sum payment.
- You can make additional payments at any time throughout the year (called additional principal-only mortgage payments).
You can also choose to make bimonthly mortgage payments rather than biweekly. With bimonthly payments, you would pay half of your mortgage payment on the 2nd of each month (for example, the 1st and 15th) for a total of 24 payments per year. Making an extra payment each month will help you pay off your mortgage faster, but because a month is typically longer than 4 weeks (28 days), the savings on a bimonthly plan will be slightly less than with a biweekly plan.
Finally, you could divide your monthly payment by 12 and deposit that amount into a savings account each month. Then, at the end of the year, you could remit the accumulated amount to your lender as an additional payment that goes toward the principal only.
Conclusion on biweekly mortgage payments
Whether you choose to make biweekly or monthly mortgage payments depends on your financial capabilities and your attitude toward debt. If you want to reduce your mortgage balance and have the means to do so, biweekly payments may seem appealing. If you can view your mortgage as a healthy form of debt, go for monthly payments. Also, remember that paying off your mortgage faster means taking money away from other financial obligations.
Done correctly, biweekly mortgage payments can mean you pay less interest over the life of your loan, saving you money and reducing your balance more quickly — but you need to make sure the extra payments are applied toward your principal and aren’t subject to prepayment penalties.
Biweekly Mortgage Payment FAQs
Additional reporting by Taylor Freitas
