Biweekly Mortgage Payment Calculator
What is a biweekly mortgage?
Borrowers usually pay mortgages monthly. With a biweekly loan, borrowers make a payment every other week.
Why would I want a biweekly loan?
You should consider a biweekly payment plan because you will save on interest charges over the term of the loan. In addition, although you will make more payments with a biweekly loan, you will pay off the loan sooner than with a monthly payment plan.
Biweekly mortgage calculator calculates interest saved when borrower pays one-half of the monthly payment every other week. Compare two loans in one schedule.
- Borrowers pay a traditional mortgage monthly.
- With a biweekly mortgage, a payment is due every other week.
- The biweekly payment amount is one half the monthly amount.
- You can compare the two loans in one printable schedule.
How will a biweekly mortgage reduce the interest amount paid?
The payment amount for a biweekly mortgage is one-half of the monthly amount. Since there are 52 weeks in a year, you will make 26 regular payments when paying every other week. That is the same as making 13 monthly payments.
For example, if the monthly payment is $2,000, the mortgage holder will pay $24,000 per year when paying monthly. When paying biweekly, the mortgage holder will pay $26,000 ($2,000 / 2 = $1,000 × 26 = $26,000) per year.
The mortgage holder pays more per year (an amount equal to one monthly payment). The benefit is that the debt will be paid off sooner, and the total interest paid will be lower.
How much will you save with a biweekly payment plan?
The amount you save depends on the total amount of the loan and the interest rate. The higher the loan amount or interest rate, the more you will save in absolute terms. Use this calculator to calculate your specific savings. More details below…
The Calculator-Compare a Traditional Loan to a Biweekly Loan
Information
Monthly vs. Biweekly Payment
An accelerated biweekly mortgage will save you money compared with a monthly mortgage. As the illustration above shows, this outcome is a mathematical certainty.
However, whether monthly or biweekly, mortgages are significant commitments. Over the term of the loan, total interest charges at a 5% rate will exceed 60% of the original loan amount.
For a $325,000 loan, total interest exceeds $300,000 with the monthly option and $247,000 with the biweekly option. Saving more than $50,000 with the biweekly option is substantial, but $247,000 is still a large amount.
Can anything be done to reduce loan costs further?
Possibly.
Biweekly Mortgage Calculator with Extra Payments
If you have sufficient cash flow, you can make extra payments that reduce the loan balance. When you reduce the balance, you lower the interest charged. This is called prepaying principal.
Even a single extra payment will save interest. This calculator supports lump-sum or one-time extra payments, as well as a series of additional payments.
To see how much you will save, you may apply the extra payment to the monthly loan, the biweekly loan, or both. For example, you may want to compare a debt paid biweekly without additional payments to a debt paid monthly with extra payments.
You may also want to compare how much the biweekly loan saves over the conventional loan when you add extra payments to increase the savings further.
Note: Consistent with the design of this calculator, the extra payment for the biweekly loan will be one-half of the amount you enter. This is intentional.
A biweekly loan will save you money.
A biweekly loan combined with extra payments will save you more money.
But is either approach the right long-term financial strategy?
Forgone Opportunity Costs—They Can Be Significant
Earlier, when explaining how a biweekly loan works and how it saves interest charges, the example showed that if the borrower pays every other week, they will pay $2,000 more per year than if they make 12 monthly payments.
You should ask what else you could do with the $2,000.
Could you invest it?
If you make biweekly payments, you lose the opportunity to invest that amount. Not being able to save and invest is a forgone opportunity. It does not return.
The question is this: if you invested the $2,000, how much would it earn over the term of the biweekly loan? Would the investment gains exceed the interest you expect to save?
Several calculators on this site will answer these questions. The Savings Calculator is a good place to start.
You want to know the future value of $2,000 invested every year for approximately 22 years (a typical term for a biweekly loan at current interest rates). If the future value is greater than the interest you save, you may decide not to take out a biweekly mortgage.
Remember that investing usually involves risk, while the interest saved with a biweekly mortgage is a mathematical certainty.
Charts
If you find columns of numbers difficult to evaluate, charts can help. The updated charts provide a quick summary of details in the amortization schedules.
This calculator includes six charts.
If you are a blogger, you may export () any chart you create and post it on your site to support your analysis.
What do you think?
Is a biweekly loan appropriate for you? You may leave comments or questions below. Let me know what information you need.
Biweekly Loan Calculator Help
Enter nonzero values for any three of the primary loan variables: “Loan Amount,” “Total Months,” “Annual Interest Rate,” or “Regular Monthly Payment.” Enter 0 for the one unknown value.
The calculator will compute the unknown. It will also calculate the biweekly payment amount (half of the monthly payment amount), the total interest due when paying the debt with monthly payments, and the total interest when paying with biweekly payments. Finally, it will calculate the interest saved as a result of paying with biweekly payments.
The calculator will also sum the extra payment amounts.
Biweekly Calculator with Amortization Schedule
The default behavior merges the monthly payment schedule with the biweekly schedule. The merged payment schedule allows you to see the cumulative interest paid at the end of each year for both options. You can also see the loan balance for each method at any point during the repayment period.
Under “Options,” there is a feature that lets you create independent (non-merged) amortization schedules for either the monthly loan or the biweekly loan. When you select an individual payment schedule, the calculator enables you to set the loan date and first payment date, as well as other loan options.
It is not necessary to click the “Calc” button before clicking the “Payment Schedule” button.
Be aware that changing either the “Long Period Options” or the “Short Period Options” may affect how interest is charged for the days between the loan date and the first payment date.
Use the charts to compare the two cash flows visually.
Rose Fife says:
When applying a lump sum payment to reduce balance of a land contract, should a new amortization schedule be done, using the old balance minus the payment? Or do you just calculate the amount as a number of payments and pick up the schedule down the payment line?
Karl says:
Just deduct the lump sum from the principal, and continue on with the schedule.
Rose Fife says:
Shouldn’t the payment reduce a little due to reducing balance in same time frame of original land contract?
Karl says:
The payment could be reduced, but it doesn’t have to be. This depends on what the lender and the borrower agree on.
If the payment is not reduced, then the loan will be paid off faster than if it is reduced. Normally, if the loan is issued by a commercial lender, their software (and the loan agreement) is not set up to reduce the payment. If the borrower wants the payment reduced, they would have to pay off the loan and negotiate a new loan on the new, lower balance.
But again, my comments are only generalities. The specifics can and do vary.
Karl says:
One other thing, I’m not sure why you are using the biweekly payment calculator, since your questions are not about biweekly loans, per se. If you want to use a calculator that has the ability to recalculate a new payment after a lump sum extra payment, you can use this calculator. It might take a bit of effort to learn how to use it for your particular calculation, but if you decide to try it and have questions, just ask. The calculator can create an amortization schedule with the payment changing or not changing. If you create both, then you can compare the differences.