Biweekly vs monthly mortgage
By Jude Wallis
Paying half the mortgage every two weeks makes 26 half payments a year, which is one extra full payment. On a $250,000 loan at 6.5 percent over 30 years the monthly payment is $1,580.17, the biweekly one is $790.09, and the loan clears in 628 biweekly periods instead of 360 months, saving $73,434.82.
| Biweekly schedule | Monthly schedule | |
|---|---|---|
| Payment | $790.09 every two weeks. | $1,580.17 a month. |
| Paid in a year | 26 half payments, which is 13 monthly payments. | 12 monthly payments. |
| Time to clear the loan | 628 biweekly periods, a little over 24 years. | 360 months, the full 30 years. |
| Interest paid | $245,426.40 over the life of the loan. | $318,861.22 over the life of the loan. |
| Where the saving comes from | The 13th payment, plus interest accruing on a balance that falls two weeks sooner. | Nothing to come from. This is the contracted schedule. |
| What the lender does with it | Some hold the half payment until a full one arrives, which removes most of the effect. | Applies it on the due date, as written. |
On this page
The extra payment is the whole trick
A year has 52 weeks, so a fortnightly schedule fits 26 payments into it. Each is half of $1,580.17, so 26 of them come to 13 monthly payments rather than 12. The saving is not produced by the fortnightly rhythm; it is produced by that 13th payment landing on the principal every year.
The fortnightly rhythm does add a little on top, because the balance drops two weeks earlier than it otherwise would and interest is charged on what is left. On this loan the two effects together take the term down to 628 periods and cut interest from $318,861.22 to $245,426.40.
One extra payment a year does the same thing
If the lender will not run a true biweekly schedule, dividing $1,580.17 by 12 and adding that to each monthly payment gets you to almost the same place, and you keep control of it. The mortgage payoff calculator prices that version, and how extra payments work explains why every additional dollar goes straight to principal.
The question worth asking the servicer is what happens to a half payment that arrives between due dates. A lender that holds it in suspense until the second half arrives has given you a monthly schedule with extra steps, and the $73,434.82 does not appear.
What the comparison is really about
Both schedules pay the same rate on the same loan under the same amortisation rules. The only difference is how much money arrives in a year and how soon. Once that is clear, the choice is a cash flow question: can the household take a payment every fortnight rather than every month, reliably, for two decades. The biweekly mortgage calculator shows the term and interest for any loan, and the remaining loan balance calculator shows where the balance sits at any point along the way. This is educational material, not financial advice.
Worked examples
A \$250,000 loan at 6.5 percent on both schedules
A $250,000 mortgage is written at 6.5 percent over 30 years. What changes if half the payment is made every two weeks?
- The contracted monthly payment that amortises $250,000 over 360 months is $1,580.17, so the biweekly payment is $790.09.
- Charge interest at the annual rate divided by 26 each fortnight and the balance reaches zero after 628 periods.
- Total interest is $245,426.40 biweekly against $318,861.22 monthly.
The biweekly schedule clears the loan in 628 periods and saves $73,434.82 of interest.
A larger loan at a lower rate
A $400,000 mortgage at 6 percent over 30 years. Does the same effect hold?
- The monthly payment is $2,398.20, so half of it is $1,199.10 every two weeks.
- The balance reaches zero after 638 biweekly periods, a little under 24 and a half years.
Interest falls by $99,248.03. The saving scales with the loan, because the mechanism is one extra payment a year either way.
Common questions
Is biweekly better than paying one extra payment a year?
Only slightly. The extra payment does most of the work; the fortnightly timing adds a small amount on top.
Do lenders charge for biweekly plans?
Some third-party services do. Ask whether the servicer will accept the schedule directly before paying anyone a fee.
Does the interest rate change?
No. Both schedules pay 6.5 percent here. Only the timing and the number of payments differ.
Is this financial advice?
No. It is educational material comparing two payment schedules on the same loan.
Keep reading
This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.