Real Estate

Biweekly Mortgage Payment Plans: All You Need to Know

Biweekly Mortgage Payment Plans - All You Need to Know

Under the appropriate conditions, biweekly mortgage payments spare you thousands of dollars in interest and allow you to pay off your home loan faster. However, in the wrong circumstances, it may be ineffective or become an expensive mistake.

Usually, mortgage payments are paid monthly because they are due monthly, but in the case of a bimonthly payment, you pay half of your monthly principal every 2 weeks, which aggregates to 13 months of full payment annually.

Does Biweekly Payment Have Any Impact?

Mortgage repayment plans that are paid every two weeks will help you own your property sooner. Just like other mortgage repayment accelerating techniques, it pays off your debt faster and saves you money on interest.

Also, if the loan servicer charges more to process your payments and you have a mortgage refinance option that could save you more time and money, the biweekly mortgage may be the most cost-effective option.

You Pay More With the Standard Monthly Repayment

A conventional mortgage requires one payment each month, for a total of twelve payments per year, therefore translating to 360 payments if you have a 30 years loan.

Also, every mortgage loan has an interest component and a principal component to its payment, with the interest portion paid to your lender to cover the monthly interest on the balance you still owe, while the majority of the money is spent on actually lowering the balance.

And in effect, the interest expense decreases as you make your payment promptly every month in what is referred to as loan amortization.

Still one has to weigh the options to know if the biweekly payment plan is a good course of action. And here are a few things to consider.


Payless interest: The amount you borrowed usually determines how high your interest rate will be. For instance, on a mortgage of $300,000 with a 4 percent interest rate and a loan life span of 30 years, biweekly payments will save you $35,000 in interest.

Pay down your mortgage faster: By paying more principal on your mortgage, you’ll be debt-free sooner, and going by the figures earlier mentioned you will offset your loan in a maximum of 26years, instead of 30years.

Plan for your cash inflow: If you get paid biweekly, you may find it easier to pay your mortgage every two weeks. And if your housing mortgage is your highest expenditure, managing your finances may be a lot easier.


Increased housing costs: Expending a larger chunk of your income on your mortgage could take a toll on your purse and affect other regular expenditures, such as saving towards your retirement, paying other debts, and vacationing with your family.

And if you have made the payment, it most likely won’t be refunded to you even in an emergency. The only option available to you would be to get a new loan such as cash-out refinance or a home equity loan for quick cash.

Your lender may disagree: Check the closing disclosure document given to you by the lender at the Finalization of the original mortgage to ascertain that your lender will apply partial payments to your loan. But If you don’t have your closing disclosure call your mortgage servicer and ask about their biweekly payment policy.

Now that you are armed with adequate information about the pros and cons of making your mortgage payment biweekly, you can easily decide whether or not it’s the right thing for you. Here are some yardsticks to measure if it’s the right plan for you.

Take Into Account Your Other Debts

You have to consider the percentage of your other debts and put more funds towards the one with the highest interest. For instance, a home interest rate of 4%, 2% auto loan, a 6% college loan, and a 16% credit card debt, putting more money toward your mortgage or auto loan will not save you as much as putting extra money toward a higher-interest student loan or credit card. In the end, paying off your loans quickly will almost certainly save you money.

Examine Your Savings Account

Prepaying your mortgage isn’t a good idea unless you have a sizable emergency fund with at least six months’ worth of expenses set up. Being caught off guard by an emergency expense will be embarrassing, but even more costly if you have to get a second loan and pay a higher interest rate.

Examine the Conditions of Your Loan

If your lender can accept partial payments, it should be specified in the mortgage paperwork you signed when you took out your house loan.

How to Set Up Your Biweekly Payment

There are various options for paying your mortgage biweekly, as well as one approach to avoid.

Visit the website of your mortgage servicer: Some creditors make it simple for customers to pay their bills monthly online, but oftentimes it doesn’t help homeowners as much as anticipated because you still have to make extra principal payments, that will only apply twice a year, on your 13th and 26th monthly installments rather than every two weeks.

Make a phone call to your mortgage servicer: Some mortgage servicers do not have advanced online technologies in place. You may need to call to inquire about their biweekly payment schedule and whether they have a plan you can join. But make sure there is a written agreement.

Make it happen: You don’t necessarily have to go through the bank to set up your biweekly payment, you can do it by yourself. This method will even save money on interest and pay off your loan faster without signing up for an official plan. You can do this by sending extra money to your lender, but make sure it’s clearly labeled as a payment toward the debt. If you want to make the same additional principal payment every month, your lender’s online payment interface may even allow you to do so automatically.

Third-party service providers should be avoided if at all possible: Since it’s something you can arrange yourself, try as much as possible to avoid contracting it to an agent. Also, an agent may collect your contribution biweekly and only remit it to your lender once a month, thereby defeating the purpose of the payment plan.

The Author

Ajisebutu Doyinsola

Doyinsola Ajisebutu is a journalist and prolific writer who takes a special interest in Finance, Insurance, and the Tech world.