Should you make biweekly mortgage payments? (2023)

How biweekly mortgage payments work

If you opt for biweekly mortgage payments, you essentially split your required monthly mortgage payment in half and pay every other week instead of monthly.

Making biweekly payments adds the equivalent of one extra monthly mortgage payment each year.

This type of payment plan helps you budget your mortgage payments more effectively if you are paid weekly or semimonthly. Instead of one large monthly payment, you can make smaller payments more frequently.

Before you decide, you’ll need to clear this new payment plan with your lender, as some lenders require approval for making biweekly payments. Confirm if there are any fees associated with changing the payment plan.

“It can be possible to time your biweekly mortgage payments to pay out every time you get a paycheck as a matter of convenience,” explained Chuck Williams, CEO of Percy, a real estate and mortgage data analytics and marketing company. “So you can spread the pain that way and pay down the loan faster, as there are more payments made during the year.”

» MORE: Should you pay off your mortgage early?

Calculating biweekly mortgage payments

Let’s say you currently have a $250,000, 30-year fixed-rate mortgage loan with an interest rate of 5.29%. Your monthly payment of principal and interest equals $1,386.71 and adds up to $16,640.52 annually. However, if you choose to make biweekly payments, you’ll pay $693.35 every other week, or $18,027.1 total for the year.

With biweekly payments, though, you pay much less in interest over the loan term because you pay off more of your mortgage each year. With this example, you would save $49,635.61 in interest over the life of the mortgage. You would also reduce the time it takes to pay back the loan from 30 years to 25 years.

Pros and cons of paying your mortgage biweekly

A significant benefit of biweekly mortgage payments is that you’ll pay much less interest over the life of the loan. You’ll also finish paying off your loan faster because you’ve made extra payments each year.

But a biweekly payment plan isn’t for everyone. Making the equivalent of one extra monthly mortgage payment annually means you'll spend more each year on housing costs. This could add further strain to a tight budget.

» MORE: Pros and cons of paying off your mortgage before retirement

How to set up biweekly mortgage payments

You can start making biweekly payments at any point during your mortgage term, but there are a few steps to follow.

• Call your lender (or loan servicing company). Confirm if there’s a biweekly payment program you must enroll in.
• Calculate the fees (if any). Some lenders charge fees for enrolling in biweekly payment programs. If so, calculate if the fee is worth your overall savings in interest.
• Confirm that the extra payment goes toward the principal. Remember, lenders make money off interest, so keep track of whom you spoke with and if they confirmed that your extra payment is automatically applied to the principal.
• Clarify the process for the first month. Some lenders may require an additional amount upfront for the first month before you can start making biweekly mortgage payments.
• Ask about prepayment penalties. Make sure there’s no prepayment penalty for your mortgage. You can find this information in your loan documents.

“Keep in mind: Biweekly payments need to be coordinated directly with your lender. Otherwise, you can risk having additional payments going to principal buydowns instead of toward a scheduled amortized payment, leading to possible incomplete or late payment fees,” Williams warned.

Third-party payments

There are third-party companies that tout biweekly payment services on your behalf, but these companies may charge high monthly or setup fees, and they might make it difficult to get out of a payment contract.

Even worse, your credit score will suffer if the company is careless and misses one of your monthly mortgage payments.

Other mortgage payment options

If your lender doesn’t allow biweekly payments or you’re not sure it’s the right strategy for your finances, consider these alternatives for possibly paying off your mortgage early.

Make at least one additional payment every year

Your lender might allow you to make a yearly principal buydown payment in addition to your regular monthly payments. You can do this by dividing your monthly payment by 12 and setting this amount aside each month in a savings account. At the end of the year, you’ll have more than enough saved to make an extra payment toward your principal.

Alternatively, you can make an annual payment for a varying amount, such as when you get your tax refund, earn a bonus at work or enjoy an unexpected windfall.

Refinance your home loan

Another way you can pay off your mortgage sooner is by refinancing into either a lower interest rate or a shorter loan term. If you refinance your 30-year mortgage to a 15-year term, you can save thousands of dollars (though your monthly payment will increase).

Keep in mind that refinancing does carry fees, so be sure to factor those costs in when calculating how much you can save.

Get rid of PMI

Private mortgage insurance (PMI) is an extra fee the lender charges for those who don’t put down 20% on a conventional loan. You can eliminate PMI once you achieve at least 20% equity in your home, either through payments or with a new property appraisal. Once you get rid of this monthly PMI payment, you can put the cash toward the mortgage principal and accelerate your equity even more.

Bottom line

Biweekly payments can help you pay off your mortgage sooner, which reduces the amount of interest paid on the loan. Before you decide to make extra mortgage payments, you’ll want to consider your overall financial situation. For example, it may not make sense to pay off a low-interest mortgage loan early with funds that could be used to pay off high-interest debt (like credit card balances).

However, it could make sense to make biweekly payments if you can comfortably afford the additional expense in your budget and it doesn’t cause you to go into debt in other ways.