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Home Buying


Are Bi-Weekly Mortgage Plans Worth It?

The simple answer is: yes, it does. At the most basic level, bi-weekly payments require you to make a payment on your mortgage every two weeks, instead of monthly. That means that instead of making 12 payments a year, you’ll make 13. And, the 13th payment will go directly to the principal on your loan, helping you pay less interest over time, as well as pay off your loan and build up your equity faster.

Bi-weekly programs work, but you may not need to sign up for one to make it happen. In fact, many times you can self-manage your loan and make extra payments without signing up for anything – and you’ll probably see better results in the long run.

How does this work? Instead of sending payments to your lender every other week, you can reach the same goal by making your regular monthly payment and then adding 1/12 of your regular mortgage payment to your monthly amount. So, if you pay $1,000 every month for your mortgage payment, start paying $1,085 each month. That extra amount will be considered your 13th payment at the end of the year.

Why would we suggest self-managing versus signing up for a bi-weekly payment program? Two reasons:

  1. limit your financial obligation; and
  2. some plans are not what they say they are.

If you sign up for a payment program, you are committed to make 13 payments throughout the year. Whereas if you self-manage and you have a month where you can’t make the extra payment, you can either not make it or add the amount on to your next payment.

There are different bi-weekly payment programs available in the market. Do your homework to make sure you understand how they post your payments. In some cases, the payments will only be posted once a month – which pretty much defeats the purpose of bi-weekly payments. And, some programs require fees for set up and charge a penalty if you decide to stop making bi-weekly payments prior to the end of the year.

You’re committed to making the payments when you use a bi-weekly payment program. So, if you think you may have difficulty, or lack the discipline to make extra payments each month, consider asking your lender if they have a bi-weekly payment program.

Information is for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author.