Bi-Weekly vs Monthly Payments: Which Saves More?

Bi-weekly mortgage payments have gained popularity as a simple way to pay off your home faster. The concept seems almost magical: pay half your monthly payment every two weeks and somehow save tens of thousands of dollars.

The Math Behind Bi-Weekly Payments

A standard mortgage has 12 monthly payments per year. With bi-weekly payments, you pay half your monthly amount every two weeks. Since there are 52 weeks in a year, that's 26 half-payments—equivalent to 13 full monthly payments.

Real Numbers Comparison

Monthly Payments:

• Loan: $300,000 at 6.5% for 30 years
• Monthly payment: $1,896.20
• Total interest paid: $382,633
• Payoff: 360 months (30 years)

Bi-Weekly Payments:

• Bi-weekly payment: $948.10
• Total interest paid: $326,518
• Payoff: 309 months (25 years, 9 months)
• Savings: $56,115 in interest

The Hidden Catch

The savings come entirely from the extra payment, not from some interest calculation magic. You'd get nearly identical results by adding 1/12 of your payment to each monthly payment.

Watch Out for Fees

Some lenders and third-party services charge setup fees ($200-$400) and monthly processing fees ($5-$10) for bi-weekly payment programs. These fees can significantly reduce your savings.

DIY Bi-Weekly Alternative

The smartest approach is to skip formal bi-weekly programs entirely:

1. Divide your monthly payment by 12
2. Add that amount to each monthly payment as "additional principal"
3. Make payments as usual on your regular schedule