Biweekly Mortgage Payments: Do They Actually Save Money?
Biweekly mortgage payment plans are often marketed as a simple trick to pay off a mortgage faster, and the underlying math does work — but understanding exactly why it works, and watching for fees some programs charge to enable it, matters before signing up for one. How a biweekly schedule actually creates extra payments A standard mortgage is paid monthly — 12 payments per year. A biweekly schedule instead makes a half-payment every two weeks. Since there are 52 weeks in a year, that works out to 26 half-payments annually — the equivalent of 13 full monthly payments instead of 12. That extra payment, applied to principal, is what accelerates the payoff. Why this shortens the loan term That one extra payment per year, applied consistently, reduces the principal balance faster than the standard amortization schedule assumes, which both shortens the overall loan term and reduces total interest paid over the life of the loan — often by several years on a 30-year mortgage, dependin...