Benefits of a Bi-Weekly Mortgage

A bi-weekly mortgage is a mortgage payment that has been split into two payments. The payments are due every two weeks, instead once every month. Though this type of loan amortization has been available for years with many of the major lenders, borrowers have recently learned the benefits of this program when it comes to reducing their mortgage Principal.

A bi-weekly mortgage defined

A bi-weekly mortgage payer will make 26 half payments over the course of a year, which is equal to 13 monthly payments. In essence, borrowers using this method of loan amortization are making an additional monthly payment each year. The extra payment is used to lower the principal balance of the loan.

With one extra payment a year, the mortgage can be paid off anywhere from six to eight years sooner than by simply making 12 monthly payments every year. Before taking this step, check with the lender to ensure there is not a pre-payment penalty that will become an issue if the mortgage is paid off before the end of the term.

Your budget

Making a mortgage payment once every two weeks makes it easy for many people to budget because many employers provide paychecks every two weeks. Borrowers can take half their mortgage from each paycheck and benefit from the additional payment each year in addition to making sure their budget stays on track.


It is important to consider how long one will live in the home before deciding to take the loan option. Since this loan option reduces the interest paid over time, the borrower should plan to reside in the home for more than five years.  If, however, the borrower doesn't intend to live in the home for more than five years, the money would be better spent elsewhere because there is no guarantee that the money will be available as equity once the home is sold.

Consider your retirement and whether or not the money invested would work best if invested in a fund. Also, take into consideration other options, like IRA or college funds. Make sure paying off the mortgage early would not stand in the way of other financial goals.

Carefully considering all the options and working to avoid fees for enrolling in bi-weekly payment programs will provide the best result. This type of mortgage should not be confused with the bi-monthly mortgage payment which requires half the mortgage payment be made twice a month, because it will not provide the same benefits as the bi-weekly option.