Biweekly Loan or Mortgage
Definition and meaning of Biweekly Loan or Mortgage in real estate.
A biweekly loan or mortgage is a home financing arrangement where payments are made every two weeks instead of once a month, resulting in twenty-six half-payments per year.
In more detail
This payment schedule accelerates the amortization process by matching the pay cycles of many wage earners. Because there are fifty-two weeks in a year, making a payment every two weeks results in twenty-six half-payments, which is equivalent to thirteen full monthly payments. This extra payment is applied directly to the principal balance, which reduces the total interest paid and shortens the loan term.
Borrowers should confirm whether their lender charges setup fees or utilizes a third-party administrator for this payment schedule.
Key facts
| Category | Mortgages & Financing |
|---|---|
| Also known as | Biweekly mortgage payment plan |
| Frequency of payments | Every two weeks, resulting in twenty-six payments annually |
| Primary benefit | Shortens the repayment period and reduces lifetime interest costs |
A homeowner signs up for a biweekly mortgage payment program, paying a set amount every two weeks rather than a larger payment once a month, reducing their loan term.
Frequently asked questions
How much interest do you save with a biweekly mortgage?
By making twenty-six half-payments, you effectively make one extra full monthly payment each year, which can save you thousands of dollars in interest and shave several years off a thirty-year mortgage.
Can you set up a biweekly schedule yourself without fees?
Yes, instead of paying a lender or third party to set up a biweekly plan, you can simply divide your monthly principal payment by twelve and add that extra amount to each monthly payment.