Biweekly Loan Calculator

Biweekly Loan Calculator is used to calculate the mortgage payments on a biweekly basis. You will get a biweekly amortization schedule with all the details about the loan and payments.

What are biweekly payments?

When a borrower gets a loan from a lender, he is expected to repay the loan with interest with installment payments. By default, most loans use monthly payments. Biweekly payments require the borrower to make a payment every two weeks. Biweekly payments allow the borrower to pay off his loan much faster compared to monthly payments. Not only can the borrower pay off the loan years earlier, but he will also save tons of money on interest payments.

How do biweekly payments work?

The biweekly payment amount is half the size of monthly payments. There are 52 weeks in a year, which means the borrower would make 26 payments each year. Since each biweekly payment is half the monthly payments, borrowers are essentially making the equivalent amount of 13 monthly payments which is only one more payment than the monthly schedule. One extra payment per year might not seem like a lot, but it does make a difference over the long run.

How much faster can I pay off my loan with biweekly payments?

It depends on the size of your loan, the interest rate, and the terms. You can pay off your loan years earlier if you have a 30-year fixed interest rate and thousands and thousands of dollars in savings.

Biweekly Payment Example

For a $200,000 loan with 6% interest and a 30-year term, here's what you will pay with the default monthly payment. Monthly Payment - $1,199.10 Total Interest Payment After 30 Years - $231,676.38 Total Payment (Principal + Interest) - $431,676.38 With a biweekly payment, the following is your payment detail. Monthly Payment - $599.55 Total Interest Payment After 25 Years - $182,052.37 Total Payment (Principal + Interest) - $382,052.37 Total Savings - $49,624.01 Payoff Time - 5 and half years earlier As you can see, with a biweekly payment plan, you will knock five and half years off your mortgage and save $49,624.01 in interest payments.

Is it better to pay a loan biweekly or monthly?

It depends on your situation. If your goal is to save money on interest, then biweekly payment is a good option. However, it also ties up more cash which might impact your lifestyle, or drain capital from other investments. Additionally, if you owe money on other debt with a higher interest rate, you should pay off these debts before considering biweekly payments.

Biweekly Payment Alternatives

Another more flexible option is to make extra payments instead of biweekly payments. With a biweekly payment plan, you will be paying once every two weeks. Even when you can no longer afford it, you still need to make payments which might cause you to default. Extra payments on the other hand are more flexible as you will stick with monthly payments, but you can choose to make extra payments toward the principal amount whenever you have extra cash in hand. Both the biweekly payments plan and extra payments will save you money over the course of the loan.

Are biweekly payments more expensive than monthly?

No, the number of payments you make each year increases for biweekly payments, but you will shorten the loan term by a few years which will save you a lot of money. Biweekly payments are cheaper than monthly if you can afford the extra payments.

Pros and Cons of Biweekly Payments

There are benefits and drawbacks to biweekly payments. Below is a list of pros and cons.

1. Lower Loan Costs

With biweekly payments, the costs of the loan are cheaper than monthly payments because you save money on interest.

2. Shorter Loan Terms

You will pay off your loan much faster and earlier. A 30-year mortgage with biweekly payments will shave off 5 years from your term.

3. Building Equity Faster

If you are making biweekly payments on a home mortgage, biweekly payments accelerate the speed at which you are building equity in your home. This will help you get a home equity loan or home equity line of credit if you need money down the road.

Cons of Biweekly Payments

1. Tie Up Capital

Biweekly payments mean more money for payments which means less money for everything else. You might need to adjust your lifestyle or miss out on other investment ventures.

2. Extra Fees

Some lenders charge a fee for biweekly payments. Make sure you talk to your lender about biweekly payments before you sign the loan contract.

3. Not Flexible

Once you are set for biweekly payments, you cannot switch back to monthly. You will have to make biweekly payments throughout the whole term until your loan is fully paid off or refinance the loan if you can't afford the payments.