Biweekly and Bimonthly Mortgages: Save Money with Shortened Term?

Biweekly mortgages and bimonthly mortgages are home loans on which payments are made more frequently than ordinarily is the case. Not to be confused with accelerator mortgages, biweekly mortgages specifically are designed to shorten the repayment period and to save the borrower money in interest payments.

Biweekly Mortgages

Instead of making one mortgage payment each month, borrowers who have biweekly mortgages make one payment every two weeks. Each payment is equal to half of the amount of what one monthly payment would be. The result of this schedule is that a borrower ends up making 26 payments in one year, which is equivalent to 13 monthly payments. This one extra payment each year makes it possible for borrowers to pay off their mortgages sooner.

In sticking to this system, a borrower can expect to pay off a 30 year mortgage in about 23.5 years instead. Homeowners also can save thousands of dollars in interest, and also can build up equity in their homes more quickly.

Any homeowner can convert their mortgage to biweekly payments at any time, as this does not require specific loan program. Setting this up initially when one takes out a mortgage is done without any extra costs involved, but switching to it later will require a fee. (In a perfect world, any difference in the cost of the loan really should work for you rather than against you, because shorter-term mortgages are less risky for lenders.)


It is important to understand that, while switching your mortgage to biweekly status will save you money in interest, it does not lower your interest rate. Rather, you save money in interest because paying off your loan more quickly reduces your principal balance (on which interest is based) more quickly. Your payments might be applied on either a biweekly or a monthly basis. Biweekly application will save you the most money.

Those who are critical of biweekly loans argue that borrowers are paying a fee for something they could do entirely on their own. This is true, but this also is very difficult for many people. Instead of having an official biweekly loan, borrowers simply could make one extra monthly payment each year, or could increase each monthly payment slightly. The big benefit associated with biweekly loans, however, is that they force the borrower’s commitment to a shorter repayment period.

An alternate (and rather obvious) option to a biweekly loan that would result in a shorter repayment period is to take out a loan with a shorter repayment period in the first place. This is beneficial to the borrower in terms of the interest rate. If you take out a 15 or 20 year loan instead of a 30 year biweekly loan, you will have a much lower interest rate. However, you also must ensure that you can afford the larger monthly payments in this situation.

Bimonthly Mortgages

Upon first glace, bimonthly mortgages look extremely similar to biweekly mortgages, but the results are quite different. Instead of making a payment every two weeks, borrowers with bimonthly mortgages make a payment on two specific dates of each month -- such as the 1st and the 15th. Monthly payments still are split in two then, but no extra monthly payments are made on a yearly basis in this case.

So, contrary to what you might have heard, bimonthly mortgages only shave about one month of an individuals’ repayment period and should not be used to shorten the loan term. Rather, the main benefit of a bimonthly mortgage is that it can be incredibly useful in budget planning and money management since most people are paid twice per month.

Borrowers with bimonthly mortgages do save a bit on interest, but not a significant amount. Anyone can set up bimonthly mortgage payments on either a new or current mortgage.