How biweekly payments work
An accelerated biweekly plan splits the monthly payment in two and pays that half every two weeks. There are 52 weeks in a year, so 26 half-payments — the equivalent of 13 full monthly payments rather than 12. That thirteenth payment is pure principal, and because it reduces the balance a little every year from the start, it compounds into a substantial shortening of the loan.
On a 30-year loan at 6.5%, the biweekly plan pays the mortgage off in a little over 24 years and saves roughly a fifth of the total interest. The table shows the effect across loan sizes.
| Loan | Monthly payment | Biweekly payment | Biweekly payoff | Interest saved |
|---|---|---|---|---|
| $200,000 | $1,264.14 | $632.07 | 24.2 yr | $58,748 |
| $300,000 | $1,896.20 | $948.10 | 24.2 yr | $88,122 |
| $400,000 | $2,528.27 | $1,264.14 | 24.2 yr | $117,496 |
| $500,000 | $3,160.34 | $1,580.17 | 24.2 yr | $146,870 |
The saving depends on the interest rate
The higher the rate, the more each early dollar of principal saves. At 4% the biweekly plan on a $300,000 loan cuts about four years; at 8%, about six and a half. The payoff time shortens because the extra principal payment is a fixed share of the payment, and that payment is mostly interest at high rates.
| Rate | Biweekly payment | Paid off in | Years saved | Interest saved |
|---|---|---|---|---|
| 4% | $716.12 | 25.9 yr | 4.1 yr | $33,830 |
| 5% | $805.23 | 25.3 yr | 4.7 yr | $51,492 |
| 6% | $899.33 | 24.5 yr | 5.5 yr | $74,436 |
| 7% | $997.95 | 23.7 yr | 6.3 yr | $103,388 |
| 8% | $1,100.65 | 22.8 yr | 7.2 yr | $138,895 |
Biweekly versus simply paying extra
The biweekly plan is one way of paying about one extra monthly payment a year. Adding one-twelfth of the payment to each monthly payment achieves almost the same result with no change to your payment schedule, and a fixed extra amount lets you choose the pace. What does nothing is a 'biweekly' arrangement in which the lender collects half-payments but applies a full payment once a month: the balance falls at the same speed as before.
| Plan | Payment | Paid off in | Interest saved |
|---|---|---|---|
| Accelerated biweekly | $948.10 every 2 weeks | 24.2 yr | $88,122 |
| Monthly + 1/12 extra | $2,054.22 monthly | 24.2 yr | $87,256 |
| Monthly + $200 extra | $2,096.20 monthly | 23.1 yr | $103,449 |
| Plain biweekly (not accelerated) | $875.17 every 2 weeks | 30.0 yr | $0 |
Check how your lender handles it
Not every lender applies biweekly payments as received. Ask whether each half-payment reduces the principal on the day it arrives (true accelerated biweekly), or whether payments are held until a full payment accumulates. Third-party 'biweekly payment services' produce the same result as paying extra yourself but charge set-up fees and per-debit fees, typically several hundred dollars over the first years — money that would have saved more interest as extra principal.
| Arrangement | How it works | Result |
|---|---|---|
| Accelerated biweekly | Half the monthly payment every two weeks, applied when received | 26 half-payments = 13 monthly payments; loan ends years early |
| Third-party biweekly service | A company debits you biweekly and pays the lender monthly, plus the extra payment yearly | Same result, but set-up and per-transaction fees eat into the saving |
| 'Biweekly' with monthly application | Lender holds half-payments and applies one full payment a month | No benefit — no extra principal is paid |
Should you do it?
Paying a mortgage early is a guaranteed return equal to the mortgage rate, tax-free. That is attractive at 6–8% and less so at 3%, where retirement contributions (especially with an employer match), higher-rate debt, and an emergency fund usually come first. The biweekly rhythm suits people paid every two weeks, since the payment leaves each paycheck. Check there is no prepayment penalty — rare on US mortgages now, but worth confirming — and make sure extra amounts are applied to principal, not to the next payment.
- Accelerated biweekly = 13 monthly payments a year; the 13th is all principal.
- Equivalent to adding 1/12 of the payment to each monthly payment.
- Saving is larger at higher interest rates and earlier in the loan.
- Confirm the lender applies half-payments on receipt and that there is no prepayment penalty.
How the calculator computes it
The monthly plan uses the standard amortization schedule. The biweekly plan charges interest every two weeks at the annual rate divided by 26 on the current balance and applies the half-payment on receipt, which is how accelerated programs run. The optional extra per payment adds to each half-payment. Results assume the rate is fixed and every payment is made on time.