Biweekly mortgage
By Jude Wallis
A biweekly mortgage plan pays half the scheduled monthly amount every two weeks. Twenty-six half payments a year add up to thirteen monthly payments instead of twelve.
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The saving comes from the thirteenth payment, not from paying more often. That extra payment is all principal, so it removes interest that would have accrued on that principal for the rest of the term, and the loan finishes early.
How the servicer handles the halves decides whether any of this happens. A servicer that holds each half until a full monthly payment is assembled produces the same schedule as before plus one annual lump. A third party that charges a fee to run the plan is charging for something the borrower can do by paying a thirteenth of the payment extra each month.
A fortnightly payroll is the usual reason people ask for it. The biweekly mortgage calculator compares both paths, how extra payments work is the mechanism, and amortisation is the schedule being shortened.