Biweekly mortgage calculator

What this number means

The time saved is how much sooner the loan clears if you pay half the monthly amount every two weeks instead of the full amount once a month.

The saving is not caused by the fortnightly rhythm. It is caused by the number 26. There are 52 weeks in a year, so 26 half payments is 13 monthly payments rather than 12. That thirteenth payment lands almost entirely on principal, and every dollar of principal removed early stops accruing interest for the rest of the term.

A very small part of the benefit does come from timing, because a payment made two weeks earlier reduces the balance two weeks sooner. It is a rounding detail beside the extra payment.

Whether accelerating the mortgage is the right use of that money is a different question, and not one this page answers.

How this is calculated

• The standard monthly payment comes from M = P x i(1+i)^n / ((1+i)^n - 1).
• The biweekly payment is exactly half of that.
• The biweekly schedule is modelled on a real fortnightly cycle, at the annual rate divided by 26, which captures the small timing benefit as well as the extra payment.
• The equivalent monthly figure is the monthly payment divided by twelve: one extra payment a year, spread evenly.

Interest is rounded to whole cents as it accrues, and the final payment absorbs the rounding so the schedule lands exactly on its final month.

The Consumer Financial Protection Bureau publishes enforcement action against a biweekly payment company, which collected about 49 million dollars in setup fees between 2011 and 2014 for a service a borrower can replicate for nothing.

What this does not account for

• Fees. Third-party biweekly services commonly charge setup and per-transaction fees, which eat into the saving.
• Servicers that hold partial payments. If half payments sit in suspense until a full monthly payment accumulates, you save nothing and may still pay the fee.
• Escrow. Tax and insurance are excluded. Your real payment includes them and they are not accelerated by this.
• Prepayment penalties. Rare on modern US mortgages but not extinct.
• What else the money could do. Higher-rate debt or an employer retirement match may both beat a 6.5 percent mortgage.
• Cash flow. Two payments a month suits some pay cycles and not others, and this is a commitment you cannot easily pause.

Questions

Why does paying every two weeks save so much?

Because of a quirk of the calendar rather than anything about the timing. There are 52 weeks in a year, so paying half your monthly amount every two weeks means 26 half payments, which is 13 full monthly payments instead of 12. That extra payment goes almost entirely to principal, and compounding does the rest.

Can I get the same result without a biweekly plan?

Yes. Divide your monthly payment by 12 and add that to each monthly payment. Over a year you will have paid the same extra amount, and the result is within a few dollars of a true biweekly schedule. You keep control, you can stop any month, and there is no setup fee.

Do servicers charge for this?

Some do. Third-party biweekly payment services commonly charge a setup fee and a per-transaction fee, and some hold your half payment until a full monthly payment accumulates, which removes most of the benefit while still charging you. If your servicer offers a genuine biweekly programme with no fee, that is fine. If it costs money, the monthly method above is free and equivalent.

Will my servicer apply half payments correctly?

Not always. Many servicers will not accept a partial payment and will hold it in suspense until the rest arrives, which means no interest is saved at all. Confirm in writing how partial payments are handled before relying on a biweekly schedule.

Is paying my mortgage down early the right move?

This page does not answer that. It shows what the acceleration costs and saves. Whether that money is better used against higher-rate debt, in an emergency fund, or in a retirement account with an employer match depends on your situation and on rates this page knows nothing about.