How to Save on Mortgage with Biweekly Payments

Updated: Jul 4, 2024

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The concept of mortgages biweekly payments instead of the traditional once a month has gained more popularity in recent years. Since the advert of the internet and spam mails, it’s now very common to see a bunch of biweekly mortgage payment offers in the box.

How Do Biweekly Payments Work?

The truth about biweekly payments is that they don’t cost you more. Instead of paying every month, a biweekly payment plan pays every two weeks. This way the borrower pays for an extra month without much stress.

Here’s the math:

  • 12 months = 1 Year
  • 52 weeks = 12 months
  • 52 weeks/2 payments per month = 26 half-payments
  • 26 half payments/2 = 13 months

As seen above, a biweekly payment plan pays an extra month throughout the year. The same effect can be replicated if the borrower per month after adding 1/12th of a month’s fees to the monthly amount.

How to Set up a Biweekly Payment Plan?

Most mortgage lenders will not permit biweekly payments. But will offer to conduct such service to borrowers for an initial set up fee costing anywhere between $200 and $1,500. These plans also charge a maintenance fee from time to time.

Biweekly payment plans are also available by third payment companies working in conjunction with your mortgage lender. Under a pre-arrangement, the company collects payment every two weeks and deposits such payment in a trust account earning interest for two weeks. The company then forwards your payment to the lender when the second biweekly payment is made. Biweekly plans by companies in this category will charge a monthly or yearly fee and transaction fee. In a bid to attract those consumers who are not inclined to paying biweekly on their own, companies will offer to deduct biweekly payments from a checking account.

Paying Biweekly Yourself

Mortgage companies often try to make biweekly payments more complicated than they actually are, but this isn’t true. Instead of giving out an extra $10 or $20 to a company handling biweekly payments, it’s usually better to go biweekly on your own. Very few mortgage lenders have penalties for pre-payments outside their own approved biweekly payment program, but you don’t have to tell the lender you are paying biweekly. Just send a check containing the usual monthly payment plus 1/12th of the monthly payment to the mortgage lender at the end of the month. Be sure the check is noted to go towards the principal. With the internet, online banking, and automatic payment scheduling, it’s possible to program the deductions required for a biweekly payment plan, but the credit card company may charge a small amount for this service.

Another advantage of making biweekly payments on your own is that the company doesn’t charge you if you don’t manage to come up with the extra 1/12th payment every month. Under an approved biweekly payment plan, the mortgage lender will charge a late fee sometimes up to $100 if you pay late or do not match the required payment.

Saving with a Biweekly Payments

A biweekly mortgage payment plan helps you save dollars and become less liable to a foreclosure sooner than later. Supposing you’re on a $200,000 mortgage charging 6.5% interest over 30 years, you’d have to pay around $1,264.14 every month in interest and principle payments throughout the 30 year period. Calculated for the 30 year period, you’d have sent an accumulated $455,090.4 to the mortgage lender.

Using an instance from a borrower on a similar mortgage but using a biweekly payment plan, such borrower will pay 1 + 1/12th of the usual amount which leads to $1369.485 per month. Paying this fixed amount every year leads to a savings of $58, 747.11 and a drastic reduction in payback time from 30 years to 24 years and a few months.

See? Biweekly payment plans could save you thousands of dollars in the long run.

Coping with a Biweekly Payment Plan

A biweekly payment plan conducted on your own doesn’t cost more in the long run but in the short run, it means you’d have to pay the mortgage lender an extra amount every month until the mortgage is paid off in full.


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