What is a biweekly mortgage, and why would I want one?

Borrowers usually pay mortgages monthly. However, when your debt is a biweekly loan, you must pay every other week.

The reason why you might want to pay a loan every other week is that you'll save on interest charges over its term. Additionally, while you'll naturally make more payments with a biweekly loan, the loan will be paid-in-full sooner than with a monthly payment plan.

Why is that?

Let's do the arithmetic! Don't worry; it's elementary!

The payment amount for a biweekly mortgage is one-half the monthly amount. Since there are 52 weeks in a year, you'll make 26 regular payments when paying every other week. That's the same as making 13 monthly payments.

To put some numbers on this, if the monthly payment is \$2,000, the mortgage holder will pay \$24,000 a year when paying monthly. Or when paying biweekly, they'll pay \$26,000 (\$2,000 / 2 = \$1,000 * 26 = \$26,000) a year.

How much will you save?

This calculator will tell you precisely that. More details below

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## Monthly vs. Biweekly Payment

Without a doubt, an accelerated biweekly mortgage will save you money vs. a monthly mortgage. As the above illustration show, it's a mathematical certainty.

But, no matter how you slice it, monthly or biweekly, mortgages are significant investments for most of us. Over the term of the loan, the total interest charges at a 5% interest rate will exceed 60% of the original loan amount.

For a \$325,000 loan, total interest comes to more than \$300,000 for the monthly option and \$247,000 for the biweekly option. Sure, saving more than \$50,000 with the biweekly option is excellent, but \$247,000 is still a lot!

Can anything be done to reduce the loan costs any further?

Perhaps there is.

## Biweekly Mortgage Calculator with Extra Payments

If you have the available cash flow, you can make extra payments which are used to reduce the loan balance. When you decrease the amount owed, you lower the amount of interest due. Doing this is called prepaying principal.

Even making one extra payment will save you interest. This calculator supports both lump sum or one-time extra payments as well as a series of additional payments.

To see how much you'll save, you may apply the extra payment to either the monthly loan or the biweekly loan, or both. The idea here is, you may want to compare a debt paid biweekly without additional payments to a debt paid monthly, where you do plan to make extra payments.

Or you may want to see how much the biweekly loan will save over the conventional loan when you add extra payments to get an additional saving boost.

Note: In keeping with the theme of this calculator, the extra payment for the biweekly loan will be 1/2 the amount you enter. This is an intentional design feature, not a bug!

A biweekly loan will save you money.

A biweekly loan and making extra payments will save you even more money.

But is doing either the right, long term, financial strategy?

### Forgone Opportunity Costs - They Could Cost You!

At the top of this post, when explaining how a biweekly payment loan works and how it saves interest charges, I showed you some simple arithmetic. In the example, if you, the borrower, elects to pay every other week, you'll pay \$2,000 more per year than if you make 12 monthly payments.

You should ask yourself, what else could you be doing with the \$2,000?

Could you be investing it?

If you make biweekly payments, you lose the opportunity to invest them. Not being able to save and invest is a forgone opportunity. It does not come back.

The question then is, if you invested the \$2,000, how much would it earn over the term of the biweekly loan? Would you gain more than you expect to save interest charges?

Several calculators on this site will answer these questions for you. This Savings Calculator is a good place to start.

What you want to know is what will be the future value of \$2,000 invested every year for the next 22 years or so (typically the term of the biweekly loan at today's interest rates). If the future value is more than that amount you save in interest, then perhaps you should not take out a biweekly mortgage?

Remember though, there are usually risks to investing, while the interest saved with a biweekly mortgage or loan is a mathematical certainty.

### Charts

If you are like me, you'll get tired of staring at columns of numbers. That's where charts come into play. Take a look at the recently updated charts to get a quick summary of all the details you'll find in the amortization schedules.

This calculator includes six of them.

If you are a blogger, feel free to export () any of the charts you create and to post them on your site to help prove your point!

What do you think?

## 10 Comments on “Biweekly Payment Calculator”

Join the conversation. Tell me what you think.
• ##### Natalie hemmingersays:

why can’t I change the payment start dates on this?

• ##### Karlsays:

The calculator is not designed as an auditor’s tool. It’s designed for ease and to show how much interest can be saved over the course of years. So rather than make a user type in dates, the calculator makes a reasonable assumption.

That does not mean this site doesn’t have a calculator that will meet your needs. Use the amortization schedule. It asks you for loan and first payment date. In your case, you may not want to let the calculator calculate the payment amount, rather enter the payment amount calculated here and set to biweekly payment.

If you want to set the date when every payment is made, you can use this calculator time value of money calculator.

• ##### Briansays:

Where can i find an audit calculator because i have been making bi-weekly payments for 18 months and id like to confirm my bank is calculating interest correctly.

• ##### Karlsays:

The Ultimate Financial Calculator is designed to audit loan balances and calculate an exact payoff amount.

Once on the page, scroll down to the list of tutorials. Take a quick look at #1 for an overview and then #25 is specific for you.

• ##### Carolynsays:

I’m trying to calculate the impact of bimonthly payments on an existing mortgage.. Should the loan amount and number of months reflect the current balance or the original loan? Thanks!

• ##### Karlsays:

If you have an existing mortgage and you want to see what you would save by switching to a biweekly mortgage, then you should use the current balance. You would also use the number of months remaining on the loan for the term, if you want to compare biweekly payments with the existing mortgage.

• ##### Jennifersays:

Karl, please advise if there is a calculator for bi-weekly payments and paying extra to principal.

The calculators I have used to far are excellent to give me a ball park.

Also, what about paying extra principal to auto loan?

• ##### Karlsays:

Please take a look at the Ultimate Financial Calculator. This calculator will give you full control over the frequency of the loan(s) and payment, their amounts and the interest rate(s).

If you scroll down the page, you’ll see 25 tutorials. Everyone should take a look at #1 which presents an overview of how this calculator works. After looking at it, you’ll see there are tutorials (really step-by-step examples) for bi weekly loans and extra payments.

Feel free to ask any questions you might have if something is not clear.

• ##### Stan Gardnersays:

I want to compare:
A. Standard 20 and 30 year loan
B Standard 30 year loan paid Bi-weekly
C Standard 30 year loan paid Bi-weekly with additional payments
D Standard 30 year loan paid Bi-weekly with additional payments +lump sum

• ##### Karlsays:

I guess this is a question? The Ultimate Financial Calculator will handle all these comparisons for you. Scroll down the page for 25 tutorials and step-by-step calculation guides. Make sure you read tutorial #1 to get an overview of how the calculator works.