Use this calculator to determine your potential interest savings and shortened amortization period by switching from a standard monthly mortgage payment schedule to an accelerated biweekly one.
Mortgage Calculator Amortization Biweekly
Interest Savings Summary
$0.00Switching to biweekly payments can save you X in interest and shorten your mortgage term by Y years and Z months.
Mortgage Calculator Amortization Biweekly Formula
The calculation is based on the standard monthly payment formula (M), where the biweekly payment is M/2.
Standard Monthly Payment (M):
$$ M = P \frac{i(1+i)^n}{(1+i)^n – 1} $$
Where:
P = Principal Loan Amount
i = Monthly Interest Rate (Annual Rate / 12)
n = Total number of Monthly Payments (Years × 12)
Accelerated Biweekly Payment (B) = M / 2
Formula Source: Financial Consumer Agency of Canada Amortization Source: InvestopediaVariables Explained
- Loan Amount (P): The principal amount borrowed from the lender.
- Annual Interest Rate (I): The nominal annual interest rate, expressed as a percentage. This is converted to a periodic rate for the calculation.
- Amortization Period (N): The total number of years over which the debt will be paid off.
- Biweekly Accelerated Payment: A payment equal to exactly half of the standard monthly payment, paid 26 times per year (every two weeks).
What is Mortgage Calculator Amortization Biweekly?
Accelerated biweekly mortgage payments involve paying half of your regular monthly payment every two weeks. Since a year has 52 weeks, you end up making 26 payments, which is equivalent to 13 full monthly payments annually (26 payments / 2 = 13). This extra payment goes entirely toward the principal, dramatically accelerating the reduction of the loan balance.
The amortization calculation compares the total interest and loan term under a standard monthly schedule versus the accelerated biweekly schedule. By paying down the principal faster, you reduce the time that interest can compound, leading to significant savings and a shorter mortgage life.
How to Calculate Mortgage Amortization Biweekly (Example)
- Step 1: Calculate Standard Monthly Payment (M). Using the formula with P=$200,000, 5.5% annual rate, 25 years (n=300 months), find M = $1222.40.
- Step 2: Determine Biweekly Payment (B). Divide the monthly payment by two: B = $1222.40 / 2 = $611.20.
- Step 3: Calculate Monthly Interest Paid. For any payment, the interest is calculated on the remaining principal balance. Principal is reduced by the payment minus the interest.
- Step 4: Amortization Schedule. Create two full amortization tables (one for monthly, one for biweekly) that track the principal reduction and interest paid over the life of the loan.
- Step 5: Compare Results. Sum the total interest paid and note the final payment date for both schedules to find the savings and term reduction.
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Frequently Asked Questions (FAQ)
Standard biweekly (24 payments/year) is simply monthly payment split in half and paid every two weeks, resulting in the same interest/term as monthly. Accelerated biweekly (26 payments/year) is half of the standard monthly payment, resulting in one extra full monthly payment annually, which accelerates the term.
Q: Can I shorten my term with a monthly payment?Yes. You can achieve the same result as accelerated biweekly by making one extra principal-only payment annually with your monthly schedule, or by increasing your monthly payment amount.
Q: How much money can I save?The savings depend heavily on the loan size, interest rate, and remaining term. The higher the interest rate and the longer the term, the greater the potential savings by switching to accelerated biweekly payments.
Q: Does my lender offer biweekly payments?Most major mortgage lenders offer biweekly options, but it is essential to confirm with your specific financial institution if they offer the ‘accelerated’ version and how they apply the extra principal payments.