Biweekly Mortgage Payments: Save Thousands in Interest

If you're looking for a simple yet powerful way to pay off your mortgage years earlier and save tens of thousands of dollars in interest, biweekly mortgage payments might be the strategy you've been searching for. This approach requires no refinancing, no special approval, and minimal lifestyle changes—yet it can shave years off your mortgage and keep more money in your pocket.

What Are Biweekly Mortgage Payments?

A biweekly mortgage payment plan involves making half of your monthly mortgage payment every two weeks instead of making one full payment per month. Since there are 52 weeks in a year, you end up making 26 half-payments, which equals 13 full monthly payments instead of the standard 12.

That extra payment each year goes entirely toward your principal balance, accelerating your equity building and reducing the total interest you pay over the life of the loan.

How Biweekly Payments Work

The Standard Monthly Payment Schedule

With a traditional monthly payment schedule:

• You make 12 payments per year
• Each payment covers interest and principal according to your amortization schedule
• You pay your mortgage off in exactly 30 years (for a 30-year loan)

The Biweekly Payment Schedule

With a biweekly payment plan:

• You make a payment every two weeks (26 payments per year)
• Each payment is half of your regular monthly amount
• The 26 half-payments equal 13 full monthly payments annually
• The extra payment goes directly to principal
• You pay off your mortgage significantly faster

The Math Behind the Magic

Let's use a real example:

• Loan amount: $300,000
• Interest rate: 6.5%
• Term: 30 years
• Monthly payment: $1,896

Standard monthly payment plan:

• Total payments: 360 (30 years × 12 months)
• Total amount paid: $682,632
• Total interest paid: $382,632
• Payoff time: 30 years

Biweekly payment plan:

• Payment every two weeks: $948 (half of $1,896)
• Annual payments: 26 half-payments = 13 full payments
• Extra annual payment: $1,896 (one additional payment)
• Total amount paid: $610,264
• Total interest paid: $310,264
• Payoff time: 24.5 years
• Time saved: 5.5 years
• Interest saved: $72,368

The Benefits of Biweekly Payments

Massive Interest Savings

The primary benefit is the substantial reduction in total interest paid. Depending on your loan amount and interest rate, you could save tens of thousands or even hundreds of thousands of dollars.

Faster Mortgage Payoff

By making one extra payment per year, you can typically reduce a 30-year mortgage to about 24-26 years. That's gaining financial freedom 4-6 years earlier.

Painless Budgeting

For people paid biweekly (every two weeks), this payment schedule aligns perfectly with income. You're essentially budgeting half your mortgage payment from each paycheck, which can feel more manageable than budgeting for one large monthly payment.

Automatic Principal Reduction

Every biweekly payment includes principal reduction sooner than it would with monthly payments. The faster you reduce principal, the less interest accrues, creating a compounding effect.

Build Equity Faster

By accelerating principal paydown, you build home equity more quickly. This can be valuable if you need to access equity for home improvements, emergencies, or other investments.

No Refinancing Required

Unlike refinancing strategies, biweekly payments don't require:

• Credit checks
• Appraisals
• Closing costs
• Loan approval
• Changing your interest rate or loan terms

Flexibility

Most informal biweekly plans (making extra payments yourself) can be stopped or adjusted anytime if your financial situation changes.

How to Set Up Biweekly Payments

Option 1: DIY Approach (Best Choice)

The most flexible and cost-effective method is to manage biweekly payments yourself:

1. Keep making monthly payments to your lender on the regular schedule
2. Make an additional principal-only payment equal to one monthly payment divided by 12, every month
3. Track your extra payments to ensure they're applied to principal
4. Adjust as needed based on your cash flow

Example: If your monthly payment is $1,800, send an extra $150 each month (or $1,800 ÷ 12) as a principal-only payment. Over the year, you'll have made one extra full payment.

Advantages:

• No fees
• Complete flexibility
• Works with any lender
• Easy to stop or adjust
• You maintain control

Important: Always specify that extra payments should be applied to principal, not advance your due date.

Option 2: Lender-Sponsored Biweekly Program

Some lenders offer official biweekly payment programs:

1. Contact your loan servicer to ask if they offer a biweekly payment plan
2. Enroll in the program if available
3. Set up automatic deductions from your checking account every two weeks

Advantages:

• Automated and hands-off
• Payment alignment with biweekly paychecks
• Official program through your lender

Disadvantages:

• May charge enrollment fees ($200-$400)
• May charge monthly fees ($2-$5)
• Less flexibility
• Not all lenders offer it

Option 3: Third-Party Biweekly Payment Services

Various companies offer to manage biweekly payments for you:

Advantages:

• Automated service
• Works even if your lender doesn't offer biweekly plans
• Customer support

Disadvantages:

• Setup fees ($200-$400)
• Monthly service fees ($2-$10)
• You can do the same thing yourself for free
• Adds an unnecessary middleman
• Some services have been flagged for consumer complaints

Verdict: Generally not recommended—you're paying for something you can easily do yourself.

Common Mistakes to Avoid

Assuming Half-Payments Are Applied Immediately

Some lenders don't process biweekly payments immediately. Instead, they hold the first half-payment until they receive the second half, then apply it as one full monthly payment. This defeats the purpose of accelerated principal reduction.

Solution: Confirm with your lender exactly how biweekly payments are processed, or use the DIY approach with explicit principal-only payments.

Not Specifying "Principal Only"

If you simply send extra money without instructions, lenders may apply it to advance your next due date rather than reduce principal.

Solution: Always mark extra payments as "principal only" and confirm with your lender that they're being applied correctly.

Paying Unnecessary Fees

Third-party services and even some lender programs charge fees for something you can accomplish for free.

Solution: Use the DIY method unless you absolutely need automation and are willing to pay for convenience.

Not Checking Your Amortization Schedule

Failing to verify that your extra payments are actually reducing principal means you won't know if the strategy is working.

Solution: Check your mortgage statement each month or quarter to confirm your principal balance is decreasing faster than the original amortization schedule.

Neglecting Higher-Interest Debt

If you have credit cards charging 18% interest while your mortgage is at 4%, paying extra on your mortgage isn't the most efficient use of money.

Solution: Pay off high-interest debt first, then redirect those payments to your mortgage.

Biweekly Payments vs. Other Strategies

Biweekly vs. One Extra Payment Per Year

Making one lump-sum extra payment annually has nearly the same effect as biweekly payments:

• Biweekly: 26 half-payments = 13 full payments
• 12 monthly + 1 extra: Also equals 13 full payments

Difference: Biweekly payments reduce principal slightly faster throughout the year since payments arrive sooner, but the difference is minimal.

Best for: Biweekly is better for those who get paid every two weeks; annual extra payment is better for those who receive bonuses or have irregular income.

Biweekly vs. Refinancing to a Shorter Term

Refinancing from a 30-year to a 15-year mortgage can save even more interest, but:

• Biweekly: Voluntary and flexible; can stop anytime
• 15-year mortgage: Required payment is higher; less flexibility

Best for: Biweekly is better if you want flexibility; 15-year refinance is better if you want to force discipline and can afford higher required payments (and interest rates are favorable).

Biweekly vs. Recasting

Mortgage recasting reduces monthly payments by making a lump-sum principal payment and reamortizing the loan:

• Biweekly: Pays off loan faster; monthly required payment stays the same
• Recasting: Reduces monthly required payment; doesn't shorten loan term

Best for: Biweekly is for paying off faster; recasting is for lowering monthly expenses.

Who Should Use Biweekly Payments?

Biweekly mortgage payments are ideal for:

People Paid Every Two Weeks

If your paychecks arrive every two weeks, biweekly mortgage payments align perfectly with your income, making budgeting easier.

Homeowners with Low-Interest Debt

If you don't have high-interest credit card debt or personal loans, accelerating mortgage payoff becomes a higher priority.

Those Seeking Financial Freedom

Getting rid of your mortgage 4-6 years early can accelerate retirement plans or provide financial security.

Disciplined Savers

If you can commit to the strategy and won't be tempted to skip payments, biweekly plans work beautifully.

Homeowners Planning to Stay Long-Term

The benefits of biweekly payments accumulate over time, so they're most valuable if you plan to stay in your home for many years.

Who Should Skip Biweekly Payments?

Biweekly payments may not be right for:

Those with High-Interest Debt

If you're carrying credit card balances at 15-20% interest, pay those off before accelerating mortgage payments.

Homeowners with Limited Emergency Savings

Build a 3-6 month emergency fund before committing to extra mortgage payments.

People Planning to Move Soon

If you'll sell your home in a few years, the benefits of accelerated payoff are minimal.

Investors with Better Opportunities

If you can reliably earn more in investments than your mortgage interest rate, investing might be smarter than paying down your mortgage.

Those Needing Maximum Cash Flow Flexibility

If your income is irregular or uncertain, maintaining flexibility with standard payments might be wiser than committing to a biweekly schedule.

Advanced Strategies

Combine with Annual Bonuses

Use biweekly payments year-round, then add your annual bonus as an additional principal payment for even faster payoff.

Increase Payments Over Time

Start with the standard biweekly approach, then increase your biweekly payment amount as your income grows.

Target Principal Milestones

Use biweekly payments to reach key principal balance milestones, such as dropping below 80% LTV to remove PMI.

Hybrid Approach

Make biweekly-style payments for a few years to build momentum, then switch to monthly when life circumstances change.

Tax Considerations

Mortgage Interest Deduction

Paying off your mortgage faster means you'll pay less interest, which could reduce your mortgage interest tax deduction if you itemize.

Impact: For most homeowners, especially after the increased standard deduction, the tax benefit of mortgage interest is minimal compared to the savings from reduced interest payments.

Opportunity Cost vs. Tax-Advantaged Accounts

Before accelerating mortgage payments, consider maxing out:

• 401(k) contributions (especially to get full employer match)
• IRA contributions
• HSA contributions

These accounts offer tax advantages that may outweigh the benefits of extra mortgage payments.

How to Calculate Your Savings

Use these steps to estimate your specific savings:

1. Find an online biweekly mortgage calculator (many free options available)
2. Input your current loan details:

• Remaining principal balance
• Interest rate
• Remaining term
• Current monthly payment

3. Compare results:

• Monthly payment schedule vs. biweekly schedule
• Total interest paid in each scenario
• Payoff date in each scenario

4. Calculate your specific savings:

• Years saved
• Interest saved
• Monthly budget impact

Frequently Asked Questions

Will my lender accept biweekly payments?

Not all lenders accept true biweekly payments where half-payments are processed immediately. Many will hold half-payments until they have a full payment. The DIY approach (making monthly principal-only extra payments) works with any lender.

Can I stop making biweekly payments if my financial situation changes?

If you're using the DIY approach or an informal biweekly plan, yes—you can stop extra payments anytime and revert to your regular monthly payment. If you enrolled in a formal program, check the terms, but most allow you to cancel.

Do biweekly payments affect my credit score?

No. Biweekly payments don't impact your credit score, whether positively or negatively. You're still making on-time payments; you're just making them more frequently and in larger total amounts.

How much will I actually save with biweekly payments?

Savings depend on your loan amount, interest rate, and remaining term. Generally, expect to save 4-6 years of payments and 15-25% of your total interest. Use a biweekly mortgage calculator with your specific numbers for an accurate estimate.

Is it better to make biweekly payments or one extra payment per year?

The financial impact is nearly identical. Biweekly payments reduce principal slightly faster because the money arrives earlier, but the difference is small. Choose based on your cash flow preference: biweekly if you're paid every two weeks, annual if you receive a yearly bonus.

Should I use a biweekly payment service?

Generally, no. Third-party services charge fees for something you can easily do yourself for free. The DIY approach gives you the same benefits without the costs.

Can I make biweekly payments on an FHA or VA loan?

Yes. Biweekly payments work with any mortgage type—FHA, VA, conventional, USDA, etc. The DIY approach works regardless of loan type or lender.

What if I can't afford a full extra payment each year?

Even making smaller extra principal payments will help. Instead of an extra full payment (equivalent to 1/12 of your monthly payment each month), try 1/24 (half that amount). You'll still save interest and shorten your loan term, just not as dramatically.

Will biweekly payments remove my PMI faster?

Yes. Since you're paying down principal faster, you'll reach 80% loan-to-value ratio sooner, allowing you to request PMI removal earlier than with standard monthly payments.

Should I make biweekly payments or invest the money instead?

This depends on your mortgage interest rate and expected investment returns. If your mortgage rate is 7% and you can reliably earn 10% in investments, investing may be smarter. If your mortgage is 7% but you're a conservative investor earning 5%, paying down the mortgage makes more sense. Also consider risk tolerance—paying down your mortgage is a guaranteed "return" equal to your interest rate.

Related Articles

• 10 Strategies to Build Home Equity Faster
• Home Equity Explained
• Amortization Schedule Guide: How Your Mortgage Payment Breakdown Changes Over Time