Biweekly Mortgage Calculator
Paying half the mortgage every fortnight is often sold as a clever trick. It is not clever, it is arithmetic: there are 26 fortnights in a year but only 12 months, so you make one extra payment.
Interest saved
$88,121.78over the loan
- Fortnightly payment
- $948.10
- Monthly payment
- $1,896.20
- Paid a year
- $24,650.65
- Time saved
- 5 years 10 months
- Cleared in
- 24 years 2 months
- Interest either way
- $382,633.47 → $294,511.68
- You pay $24,650.65 a year rather than $22,754.45 — one extra monthly payment, spread across the fortnights rather than found in a lump.
- There is no trick here. Twenty-six half payments is thirteen monthly ones, and the thirteenth goes at the principal.
- Check the lender actually applies each fortnightly payment when it arrives. Some hold them and remit monthly, which gets you the extra payment but not the faster interest accrual, and some charge a fee to set it up at all — in which case paying a thirteenth of the payment extra each month does the same thing free.
About biweekly mortgage payments
Twenty-six half payments is thirteen monthly payments, not twelve. That thirteenth payment goes entirely at the principal, and because it does that every year for the life of the loan, the effect compounds. On a $300,000 mortgage at 6.5% it saves $88,122 of interest and clears the loan five years and ten months early.
A small part of the saving comes from faster accrual — money paid on day fourteen stops accruing interest two weeks before it would have — but the great majority is simply the extra payment. That is worth knowing, because it means you can get almost all of the benefit without any arrangement at all, by paying a thirteenth of your monthly payment extra each month.
Which matters, because some lenders charge a setup fee for a biweekly plan, and some third-party services charge a monthly fee to do something you can do yourself for free. There is nothing in the mechanism worth paying for.
Check what your lender actually does with the money. Some apply each fortnightly payment when it arrives, which is the version modelled here. Others hold the halves and remit a normal monthly payment, banking the extra once a year — you still get the thirteenth payment, but not the faster accrual.
What it works out
- Interest saved over the life of the loan
- Years and months cut off the term
- What you actually pay in a year, against monthly
- Any loan — the same arithmetic works on car and personal finance
The formula
Fortnightly payment = Monthly ÷ 2, made 26 times a year = 13 monthly payments
The monthly payment on $300,000 at 6.5% over thirty years is $1,896.20, so the fortnightly payment is $948.10. Twenty-six of those is $24,650.65 a year, against $22,754.40 if you paid monthly. The difference — $1,896.25 — is exactly one extra monthly payment.
That extra payment lands on the principal, so the balance falls faster, so every subsequent fortnight carries less interest. Repeat for the life of the loan and the term falls from thirty years to twenty-four years and two months, with $88,122 less interest paid.
The rest of the effect is timing. Interest accrues on the balance, and half the payment arriving two weeks early means two weeks less interest on that half, every fortnight. It is real but it is much the smaller part of the saving.
Which is why an explicit overpayment does nearly as well. Paying one twelfth of your monthly payment extra each month puts in the same thirteenth payment a year, needs no arrangement with anyone, and can be stopped in a month you cannot afford it.
- Monthly payment
- The contractual payment. The fortnightly one is exactly half of it.
- 26
- Fortnights in a year. This is the whole mechanism.
- Extra payment
- The thirteenth monthly payment, which goes straight at the principal.
A worked example
A $300,000 mortgage at 6.5% over thirty years, paid half every fortnight instead of whole every month.
That works out to $88,121.78 over the loan.
- Fortnightly payment
- $948.10
- Monthly payment
- $1,896.20
- Paid a year
- $24,650.65
- Time saved
- 5 years 10 months
- Cleared in
- 24 years 2 months
- Interest either way
- $382,633.47 → $294,511.68
Questions
How much does a biweekly mortgage save?
On a $300,000 loan at 6.5% over thirty years, $88,122 of interest and five years and ten months off the term. The proportions hold at other loan sizes.
Why does paying biweekly work?
Because 26 half payments is 13 monthly payments rather than 12. The extra one goes at the principal every year, and a slightly faster accrual adds a little on top. There is no other mechanism involved.
Is it the same as just paying extra?
Almost exactly. Paying one twelfth of your monthly payment extra each month contributes the same thirteenth payment a year and captures nearly all the saving. You lose only the small gain from paying two weeks earlier.
Should I pay a service to set this up?
No. There is nothing in the mechanism worth paying for, and a monthly fee quietly eats the saving. If your lender will accept fortnightly payments free, take it; otherwise overpay monthly yourself.
Does my lender have to agree to it?
Yes, and not all will. Some also hold the fortnightly payments and remit monthly, which still gets you the extra payment each year but not the faster accrual. Ask which they do before assuming the figures here.
Does biweekly suit someone paid fortnightly?
That is the real argument for it. If your pay arrives every two weeks, matching the mortgage to it makes budgeting easier and the twice-a-year months with three paydays stop being a surprise.
Are there any downsides?
It is a commitment where an overpayment is voluntary. You are paying more each year either way, so the question is whether you want that fixed or optional — and whether the money would do better clearing higher-rate debt first.