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Biweekly Mortgage

Biweekly Mortgage

What Is a Biweekly Mortgage?

A biweekly mortgage is a mortgage product that permits the borrower to make payments at regular intervals instead of one time each month. A biweekly mortgage means that the borrower is paying like clockwork, or 26 half payments. The outcome is really 13 full payments more than a year period, speeding up the payoff of the loan.

The extra payment each year can give huge savings altogether interest over the life of the loan. Notwithstanding, borrowers ought to think about carefully before signing up for a biweekly mortgage since there can be a few disadvantages to these types of payment plans.

How a Biweekly Mortgage Works

A biweekly mortgage permits the borrower to make the equivalent of one extra month's mortgage payment throughout the span of a year. For instance, in the event that a borrower's month to month mortgage payment is $1,200 each month, the biweekly mortgage equivalent would bring about two payments of $600 like clockwork from the borrower. Albeit paying 26 half payments can lead to paying off the mortgage sooner, there are a few advantages and disadvantages, especially with how the payments are applied by the mortgage servicing company.

Advantages and Disadvantages or Biweekly Mortgages

Borrowers ought to think about the benefits as a whole and disadvantages of biweekly mortgages and check with the bank or mortgage company to be certain they offer biweekly mortgages.

Advantages of Biweekly Mortgages

Borrowers can pay off the mortgage sooner by making one extra payment each year. For instance, suppose a borrower has a $200,000 mortgage with a rate of 5% and a 30-year term. Assuming that the borrower does the biweekly mortgage, the loan would be paid off in 25 years or five years sooner versus the traditional mortgage with regularly scheduled payments. The extra payment each year accumulates over the long run and permits the borrower to claim the home sooner.

The interest saved because of a biweekly mortgage is likewise a huge benefit. Utilizing the financial subtleties from the above model, the total interest for the traditional mortgage would be $187,000, while the biweekly mortgage would cost $151,000 over the life of the loan. Besides the fact that a biweekly mortgage pays off the mortgage sooner, yet it likewise saves the borrower $36,000 in interest over the life of the loan.

One more advantage of a biweekly mortgage versus a traditional mortgage loan is that equity is developed sooner. Home equity addresses the portion of the home that the borrower claims. For instance, suppose a home has a market value of $200,000, and the borrower has paid off $80,000 of the $200,000 mortgage. The equity in the house would be $80,000, which the borrower could borrow from to make improvements to the home or utilize the funds for different purposes. In short, a biweekly mortgage assists homeowners with building equity quicker.

Disadvantages of Biweekly Mortgages

Some mortgage companies hold the primary payment of every month and hold on until they receive the subsequent payment before sending the two payments to the lender, consequently fairly discrediting the advantage of a biweekly mortgage arrangement. As such, the payments probably won't be applied at regular intervals to the loan. Notwithstanding, the biweekly mortgage (sent in month to month) would in any case assist the borrower with paying one extra payment each calendar year.

A few lenders and mortgage companies charge a fee to lay out a biweekly mortgage to help compensate for the lost interest due to the borrower paying the loan off prior.

Likewise, a biweekly mortgage is a firm commitment to make a payment at regular intervals. It regularly can't be changed from one month to another. Accordingly, borrowers need to determine whether they can focus on the extra payments and consider how frequently they're paid by their employers as well as their other month to month bills.

Biweekly Mortgage versus Bimonthly Mortgage

A biweekly mortgage isn't exactly the same thing as a bimonthly mortgage. The bimonthly structure requires two payments each month, which emerges to 24 payments each year. Since a biweekly payment plan doesn't stick rigorously to a month to month calendar, it includes 26 payments each year. The two extra payments each year due to the biweekly mortgage are better than the every other month mortgage in the event that the goal is to save interest and pay off the loan sooner.

Making Your Own Biweekly Mortgage

A restrained borrower hoping to partake in the benefits of a biweekly mortgage without the additional fees can structure their own payments to imitate the plan. The borrower can make payments at regular intervals, and assuming the mortgage company applies the payments right away, the borrower gets the interest savings. The borrower can likewise separate their month to month mortgage payment by 12, and set that amount to the side every month for a year. Toward the year's end, they can take the total amount saved and make an extra payment to additionally receive the rewards of the biweekly mortgage.

Under a traditional mortgage, every regularly scheduled payment is made out of some interest and some principal. Right off the bat in the loan, payments are to a great extent contained interest, yet the principal portion amount increments over the life of the loan. From the start, interest estimations depend on the assumption of 12 regularly scheduled payments each year. At the point when a borrower sends in an extra thirteenth payment, most lenders will give the whole payment to the principal, rushing the payoff horizon of the loan.


  • A biweekly mortgage is a home loan that is repaid on a payment schedule happening each and every other week. rising to 26 half payments or 13 full payment equivalents in a year.
  • A biweekly mortgage lessens borrowers' overall interest costs, and the extra payment each year can assist the borrower with paying off the mortgage sooner and save in total interest over the life of the loan.
  • Most lenders require borrowers focus on the biweekly schedule once they start it, implying that adequate cash must be close by consistently and not just at the month's end.