How Biweekly Mortgage Payments Save You Thousands in Interest

Buying a home is one of the largest financial decisions most people make. Along with it comes a mortgage, which usually spans 15 to 30 years. But did you know there’s a smart way to pay off your mortgage faster and save thousands in interest without increasing your monthly payment by much? This can be done with biweekly mortgage payments. Let’s explore how this method works and how you can start using it today.

What Are Biweekly Mortgage Payments?

A standard mortgage typically requires monthly payments—12 payments a year. With a biweekly mortgage payment plan, you make a half-payment every two weeks. This may not seem like a big change, but because there are 52 weeks in a year, that adds up to 26 half-payments annually. This means you make 13 full payments instead of 12. That one extra payment each year goes directly toward your principal, reducing your loan balance faster.

How Biweekly Payments Reduce Interest

When you borrow money to buy a home, your lender charges interest on the total amount of the loan. The longer it takes to pay off your mortgage, the more interest you pay. With biweekly payments, your loan balance decreases more quickly thanks to the 13th annual payment. Since interest is calculated on the remaining balance, paying down the principal sooner means you’ll owe less interest over time. The earlier your loan balance drops, the less interest accumulates, which leads to major savings.

Real-Life Example

Let’s say you have a $250,000 mortgage at a 4% interest rate with a 30-year term. If you make monthly payments, you’d pay about $179,673 in interest over the life of the loan. Switching to biweekly payments could shave 4–5 years off your mortgage and save you over $30,000 in interest, all without changing your budget significantly since you’re just splitting what you already pay into smaller chunks.

Shortening the Life of a Mortgage

Biweekly payments help pay off your mortgage faster for a simple reason: you are making the equivalent of one extra full payment each year. That extra payment reduces your total balance more quickly, which in turn speeds up your repayment timeline. Most homeowners who switch to biweekly payments can reduce a standard 30-year mortgage by about 4 to 6 years, making them debt-free much earlier. For people looking to retire early or reduce monthly expenses, this can be a game changer.

How to Set Up Biweekly Payments

Setting up biweekly payments is easy, and there are two main ways to do it. One option is to set it up through your lender or mortgage servicer. Some lenders offer official biweekly payment plans. They take a half-payment from your checking account every two weeks and apply the extra annual payment toward your principal. However, be aware that some lenders charge setup or processing fees for this service, so read the terms carefully before enrolling.

Do-It-Yourself (DIY) Option

If your lender doesn’t offer a plan, or you want to avoid possible fees, you can still follow a biweekly payment strategy on your own. Just make one additional monthly mortgage payment per year. To make this easier on your budget, divide your total monthly mortgage payment by 12 and add that amount to each monthly payment. This way, you’re still making an extra full payment by the end of the year, speeding up your mortgage payoff without switching your entire payment schedule.

Things to Consider Before Switching

Before switching to biweekly payments, confirm whether your loan servicer accepts partial payments and that there are no prepayment penalties. Also check account fees or requirements for automatic transfers if using a third-party service. Always make sure that extra payments are being applied to the loan principal, not put toward interest or saved as future payments.

Is a Biweekly Mortgage Plan Right for You?

If you are someone looking to pay off your home faster, reduce the total interest paid, and don’t mind a slightly more frequent payment schedule, then this could be a smart move. It doesn’t require you to increase your total payment amount, just the timing. Over the course of a mortgage, this strategy can result in major financial benefits.

Final Thoughts

Biweekly mortgage payments are one of the best-kept secrets in personal finance. With a steady plan and a bit of discipline, you can shave years off your mortgage and save thousands of dollars. Whether you use a service through your lender or do it yourself, starting a biweekly payment plan could be the key to becoming mortgage-free much sooner. It’s an easy, effective way to take control of your financial future.