Biweekly Mortgage
Definition and meaning of Biweekly Mortgage in real estate.
A biweekly mortgage is a home loan payment plan requiring the borrower to make a payment equal to half of the standard monthly mortgage amount every two weeks.
In more detail
This payment structure helps homeowners build equity faster and pay off their mortgage ahead of schedule. Since there are fifty-two weeks in a year, a biweekly plan results in twenty-six payments, which is the equivalent of thirteen monthly payments instead of twelve. The extra payment is applied directly to the loan principal, significantly reducing the compounding interest over the life of the loan. Many lenders offer this plan as an automatic debit option, which aligns well with biweekly payroll schedules.
Key facts
| Category | Mortgages & Financing |
|---|---|
| Who pays | The borrower, typically through automatic bank drafts |
| Applies to | Amortized residential home loans |
| Watch out for | Third-party servicing fees when enrolling in biweekly payment programs |
A borrower opts for a biweekly mortgage payment plan, effectively making a thirteenth full payment each year and reducing their standard loan term by several years.
Frequently asked questions
Is a biweekly mortgage the same as paying twice a month?
No, they are different schedules. Paying twice a month (semimonthly) results in twenty-four payments per year, whereas biweekly results in twenty-six payments because of the extra weeks in a year.
Are there any downsides to a biweekly mortgage?
The main downsides are that it commits you to a higher annual payment, and some lenders may charge enrollment or administrative fees to set up the schedule.
Related terms
Sources & references
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