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Bankrate Biweekly Mortgage Formula:
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The Bankrate Biweekly Mortgage Calculator helps you determine your biweekly mortgage payment amount based on your loan amount, interest rate, and loan term. Biweekly payments can help you pay off your mortgage faster and save on interest.
The calculator uses the biweekly mortgage formula:
Where:
Explanation: The formula calculates the fixed payment amount required each biweekly period to pay off the loan over the specified term, accounting for compound interest.
Details: Making biweekly payments (half of your monthly payment every two weeks) results in 26 half-payments per year, equivalent to 13 full monthly payments. This extra payment each year can significantly reduce your loan term and total interest paid.
Tips: Enter your total loan amount, annual interest rate (as a percentage), and loan term in years. All values must be positive numbers.
Q1: How much can I save with biweekly payments?
A: Savings vary but typically you can pay off a 30-year mortgage in about 24 years and save 20-25% in interest.
Q2: Is there a downside to biweekly payments?
A: The main consideration is budgeting for slightly higher annual payments (equivalent to one extra monthly payment per year).
Q3: Can I switch to biweekly payments after getting a mortgage?
A: Many lenders offer biweekly payment options, sometimes for a small fee. You can also create your own biweekly plan by making half-payments every two weeks.
Q4: How does this compare to making extra payments?
A: Biweekly payments are a systematic way to make extra payments without dramatically changing your cash flow.
Q5: Are all months treated equally in biweekly payments?
A: Yes, the calculation assumes exactly 26 payments per year (every 2 weeks), regardless of month lengths.