Weekly and Bi-Weekly Payments
Definition and meaning of Weekly and Bi-Weekly Payments in real estate.
Weekly and bi-weekly payments are mortgage repayment schedules where the borrower makes payments every week or every two weeks instead of once a month. This payment structure accelerates the reduction of the loan balance by effectively contributing the equivalent of one extra monthly payment each year.
In more detail
Standard mortgages require twelve monthly payments annually. Under a bi-weekly schedule, a borrower makes twenty-six half-payments, which equals thirteen full monthly payments in a calendar year. This extra payment is applied directly to the principal balance, reducing the total interest paid and shortening the loan term by several years.
Homeowners should check with their loan servicer to ensure the extra payments are applied correctly and that there are no processing fees associated with this schedule.
Key facts
| Category | Mortgages & Financing |
|---|---|
| Frequency options | Every seven days or every fourteen days |
| Primary advantage | Shortens the mortgage term and reduces total interest paid |
| Watch out for | Lender administration fees for setting up the program |
A homeowner switches to a bi-weekly payment schedule, paying half of their monthly mortgage amount every two weeks, which will help them pay off their thirty-year loan several years early.
Frequently asked questions
How does a bi-weekly payment plan save money?
By making twenty-six half-payments, you complete thirteen full monthly payments per year. This extra principal payment reduces the outstanding balance faster, which compound-saves interest over the life of the loan.
Do all lenders offer weekly or bi-weekly options?
No, some lenders do not offer these schedules directly. However, homeowners can achieve the same effect by adding one-twelfth of their monthly payment amount to each standard monthly check.