Pro tip deep dive: Should you switch to biweekly mortgage payments?

Myelle Lansat


Myelle Lansat

Myelle Lansat

News Editor

Myelle Lansat is a news editor at Policygenius, where she writes the Easy Money newsletter and covers insurance and personal finance. Previously, she was a personal finance writer at CNBC and Acorns, and a reporter for Business Insider.

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Getting a 30-year mortgage can seem like a fixed deal. But there’s a painless way to get ahead of that timeframe (and interest rate): bi-weekly payments.

Smart shopping expert Trae Bodge said the best financial advice she’s ever received is splitting up her mortgage payments by paying twice a month.

“I’ve done that with all three of my homes — and paid extra towards principal when I could — and I’m convinced that is why I was able to pay off my house last year at 51 years old,” said Bodge.

Why bi-weekly payments can save you serious money on your mortgage

It’s typical to pay your mortgage once a month, making 12 payments per year.

Bi-weekly payments happen 26 times per year, adding to a total of 13 full payments. That means each year you’re paying an extra full mortgage payment, turning a 30-year repayment period to 25 years and eight months, said Scott Valins, loan officer at Scott Capital Group.

For example, if you’re paying monthly sums on a 30-year fixed mortgage for $250,000 at a 3.3% interest rate (the current rate), your monthly payment would be $1,095 with $400 average interest each month. That means you’re spending $144,159.70 on interest over the life of a loan, for a total of $394,159.7 in 360 months (30 years).

If you made bi-weekly payments on the same loan, you would pay $547.50 twice a month and $180.73 in interest on average. That’s a total of $123,258.55 in interest over the life of the loan. Breaking up the bill will allow you to pay less over a shorter period of time, for an overall total of $373,258.55 in 310 months (25 years and eight months).

If you align your payments to your bi-weekly paycheck, it may be easier than paying the burden of one lump payment at the end of the month.

Check out our mortgage calculator

How can I switch over?

Making bi-weekly payments is as easy as asking your lender if you qualify for it, said Valins.

Check to see if there are any prepayment fees you might be subject to if you pay the mortgage off before the end of the loan’s term. Also specify that you want the payment applied to the principal to maximize savings.

Valins recommends setting automatic payments to your lender because at the end of the day, the bank will expect a payment from you every two weeks — you wouldn’t want to miss it.

If your bank does not offer bi-weekly payments, Valins says you can make one extra payment each year to shave off some time and interest on your loan.

Bodge started paying off her mortgage twice a month in the mid-90’s, and has three properties to thank for it. Paying off three different mortgages is one of her proudest financial milestones.

“Last year, we paid off our mortgage and, two years before, we paid off our car. We are officially debt-free and I’m pretty proud of that!”

Check out our guide to current mortgage rates

Image: Nastia Kobzarenko