How to Pay Off a Mortgage Early with a Bi-Weekly Schedule

The average mortgage borrower chooses a payment schedule that calls for one mortgage payment a month -- due around the 1st of the month. However, mortgage borrowers have options, and one option includes a bi-weekly payment schedule.

Bi-weekly Basics

A bi-weekly payment schedule involves submitting a mortgage payment to home loan lenders every two weeks, instead of once a month or every 28 days. Borrowers divide their payment in half, and submit these half payments every two weeks. Because there are 52 weeks in a year, borrowers make 26 bi-weekly payments a year, which is equivalent to 13 monthly payments, or one extra monthly payment a year.

Interest and Bi-weekly Payments

Choosing a bi-weekly payment schedule for a mortgage loan results in paying less interest throughout the life of the loan. Borrowers save on interest payments at the end of each year when they make the 13th payment to their home loan lender.

Payoff Time

If choosing a bi-weekly payment to reduce how much you pay in interest, you will actually pay off your mortgage loan in less than 30 years. According to the Mortgage Professor, a bi-weekly mortgage schedule can reduce a home loan by seven years, allowing borrowers to get rid of their mortgage debt in 23 years.

Considerations

Bi-weekly mortgage plans are inflexible, meaning, once you agree to a bi-weekly mortgage with your home loan lender, you're required to make your payment every two weeks. Missing a bi-weekly payment can result in additional interest, fees and harm your personal credit score. What's more, mortgage lenders charge a fee for establishing a bi-weekly schedule, which can reduce any savings. Borrowers who doubt their ability to keep up with a bi-weekly plan can achieve similar results by making one extra principal payment a year, or by increasing their monthly payments.

Borrowers can divide their mortgage payment by 12, and then make an additional principal payment each month. For example, if paying $1,400 a month, a borrower can increase his existing payment by $116 each month. This is equivalent to making an extra payment a year ($1,400 divided by 12 months equals $116). This is an option for borrowers who don't want to commit to bi-weekly payments.