Biweekly Mortgage Calculator

A bi-weekly mortgage payment is when the normal monthly amount is halved and instead of making one full payment each month you make two half payments every other week. This may seem like a small change in your schedule but it allows you to pay off your loan faster and reduce the total interest paid, often without even noticing.

This calculator will show you the exact differences. Enter your mortgage amount, interest rate and term to compare a standard monthly payment plan versus a bi-weekly payment plan side by side. The comparison points are the half payment amount, interest saved and shortened payoff time in years.

Here's how biweekly mortgage payments work:

A year has 52 weeks. If you pay every two weeks, there are 26 payments in a year. Each payment is half of the monthly amount so 26 half-payments equals 13 monthly rates and therefore more than the 12 monthly rates of a standard plan.

The key is in the extra payments made each year. As these go directly to reducing the principal amount of your loan, the remaining balance on which interest is calculated decreases faster than it would with a monthly payment plan. This effect compounds over the entire repayment period, so even a small change in schedule can result in you paying off your loan several years sooner and saving significant amounts in interest costs.

A fortnightly payment is not the same as two monthly payments.

Bi-weekly repayment is often confused with a twice-a-month payment plan but they are two different things. A bi-monthly payment will result in 24 payments per year, which simply splits the usual 12 monthly instalments in half. As the number of payments doesn't increase, there's very little impact on interest.

The bi-weekly payment is made every two weeks, which means that the calendar does not divide evenly into two week periods and there are 26 payments per year. The fact that you pay half of a rate twice a year is what makes a bi-weekly plan help to pay off your loan faster. Be sure to check if the provider offers a bi-weekly or semi-monthly payment option when choosing this type of plan.

How to use this calculator:

Enter the three known values - the loan amount, annual interest rate and term length. The calculator will then show you the monthly payment, biweekly payment (half of the monthly payment), and a comparison chart.

It is also possible to work backwards. If you leave the loan amount blank and instead enter the repayment rate, you can see what loan amount you could afford with that rate. If you leave the interest rate blank, you will find out what interest rate would be required for that repayment rate, and if you leave the term length blank, you can see how long it would take to pay off the loan in full. Enter three of four values and the calculator will calculate the missing value.

If you enable the "Extra Payment" option, then for each biweekly payment you can pay an extra small amount. This will compound the effect of making a biweekly payment and allow you to pay off your mortgage faster.

Calculation of rates

The monthly rate is calculated using a standard formula for the repayment of capital and interest. This formula divides the loan amount evenly over each month within the term.

M is the monthly payment, P is the principal amount of the loan, r is the monthly interest rate (annual interest rate divided by 12), and n is the number of months (number of years multiplied by 12). The biweekly payment is half of M and is paid every two weeks. Interest accrues on the remaining balance at the end of each period.

For example, a loan of $900 with an annual interest rate of 6% and a term of 5 years would have a monthly interest rate r equal to 0.06 divided by 12, and n is equal to 60 months.

Since the monthly rate is about $17.40, then the bi-weekly rate would be about $8.70 every two weeks. Over the entire term of the loan there will be 26 payments per year, which is more than the 12 payments in a monthly plan. So the bi-weekly plan can result in paying off the loan a few months earlier and less interest paid. The following table shows the individual symbols in this example and their corresponding values.

Reasons for different savings per loan.

The higher the interest rate, the more beneficial a biweekly payment plan is. This is because only the interest can be reduced and the higher the interest, the greater the potential savings. Also, the longer the length of time on your loan, the better. A 30-year mortgage has much more room to make additional payments and see their effects over time than one that will only last a few years.

There are also downsides. If the remaining term is short or the interest rate very low, then while biweekly payments can save some interest, the amount may not be significant. On the other hand, the convenience of a monthly payment might be more appealing. Enter your own values and see which option works best for you.

Pros and cons:

One advantage of biweekly payments is that they can help lower the interest paid over the life of the loan and build equity in the home faster. In addition, the need to make a large payment all at once can be replaced by a small automatic habit. For those who are paid every two weeks, this is often an easy habit to form without much conscious effort.

On the other hand, it means more money goes toward your mortgage over the course of a year, which can hurt retirement savings, emergency funds or high-interest debt that should be paid off first. Some lenders charge fees to set up a formal biweekly payment plan. In addition, some providers will temporarily hold back half-payments and roll them into monthly payments, negating the benefit of the biweekly plan.

Here's how it works:

You can achieve the same effect without a formal program by dividing your monthly payment amount by 12 and adding that amount as extra principal to your regular monthly payment. This will result in you paying one additional monthly payment per year, which has exactly the same effect as a semi-annual program. There are no setup costs or need to persuade a lender.

Regardless of which method you choose, make sure that the extra funds are used to fully pay down your principal and not temporarily invested as part of your next payment. This is the only important requirement for this method to work.

This calculator is for educational and planning purposes only and does not include escrow accounts, property taxes, insurance or lender fees. It also assumes a fixed interest rate and that each payment is made on time. Actual results may vary depending on the lender and loan terms. Check your mortgage documents and consult with a qualified professional before making any changes to your repayment schedule.