How this number is made
Biweekly mortgage math is not a trick rate. You make 26 half-payments a year. That is the same as 13 monthly payments instead of 12. The thirteenth payment is principal, and the loan ends early.
- Use the balance and the years still left, not the original 30 if you are already a few years in.
- Compare the interest rows, not just the payoff date. The savings are the interest you do not pay.
- If your servicer will not apply a mid-month payment early, sending half every two weeks may just sit until the due date. One extra monthly payment a year has the same math.
Formula
Monthly payment is the standard amortization. Biweekly payment = that payment ÷ 2, applied 26 times a year at a rate of APR ÷ 26. Thirteen monthly payments a year is the same idea.
Worked example
A $320,000 balance at 6.5% with 30 years left has a $2,022.62 payment. Half of that, every two weeks, pays the loan off about 5 years and 10 months early. Interest falls from about $408,142 to about $314,146.
Questions
Is this the same as a lower rate?
No. The note rate does not change. You simply pay more principal each year. If the rate is the problem, look at the refinance page.
What about a biweekly fee?
A company that drafts your pay and forwards it can charge a setup fee for a schedule you can run yourself. The fee is not in this result. Subtract it from the interest saved before you call it a gain.