What is Biweekly Mortgage Calculator?

Biweekly mortgage calculators are online applications that allow one to determine the financial benefit of shifting from monthly to biweekly mortgage payments. Rather than paying the entire sum monthly, clients who choose this option are able to pay half the payment every two weeks.

Here’s what you need to know:

• If you make monthly payments, you will pay 12 installments every year.
• If payments are made biweekly, there will be 13 full payments within a year, translating to 26 half-payments. This pays for one extra payment each year.

With the help of a bi-weekly mortgage calculator, you will be able to tell how much sooner you could pay off your mortgage, as well as the extra interest that could be avoided over the lifetime of the loan.

How does A Biweekly Mortgage Calculator Work?

Several important pieces of information are key to identifying your savings potential, as well as the payoff date of the loan. A bi-weekly mortgage calculator like the one shown above relies on information such as the following:

• Loan Amount: This refers to the total amount of money borrowed to pay for the home purchase.
• Interest Rate: This is the annual interest paid on the mortgage loan.
• Loan Term: This is the number of years you intend to take in order to pay off the loan, e.g. thirty years.
• Current Monthly Payment: This is the monthly mortgage payment yet to be paid.

With this information at hand, the bi-weekly mortgage calculator will ascertain:

• Your biweekly payment; this is equivalent to half the current monthly payment.
• New loan terms, with bi-weekly payments the loan will be paid off faster than the original loan term.

In the end, you stand to gain a lot in interest. The provided calculator will assist you in determining how much interest you may save when making biweekly payments instead of monthly payments.

Advantages of Using a Calculator For a Biweekly Mortgage Payment

There are a number of reasons why a biweekly mortgage calculator can be advantageous to you:

• Pay Off the Loan Quicker: Making payments every two weeks means you would make one additional mortgage payment each year. Your principal would be paid down faster, and your loan term is likely to be shorter. For instance, biweekly payments on a thirty year mortgage will result in it being paid off within approximately twenty five years.
• Save on Interest Payments: Each extra payment that you make per year decreases your loan balance. Consequently, there will be less interest accrued for a longer period of time. With a biweekly mortgage calculator, you can determine the amount of interest that you can save by using this payment method.
• Budgeting Can Be Accomplished With More Ease: If you happen to be paid biweekly, then payments made on a mortgage of this type would suit your income timing. This makes it relatively easy to budget as changing to large monthly payments are not needed.
• Straight Forward and Easy: Biweekly mortgage calculators are easy to use. It’s sufficient to just fill in some basic parameters and the device will take care of the rest.

How to Use a Biweekly Calculator of Mortgages

Most mortgage calculators are user-friendly and simple to operate, and this remains true for biweekly mortgage calculators. To help facilitate the process, here is a thorough tutorial that will guide you through this task step by step;

1. Search for a Mortgage Calculator: Go to a credible website such as calculator3.com that provides a mortgage calculator. Navigate to the section labeled Bi-weekly mortgage calculator.
2. Input Relevant Details: You will have to include relevant details such as the following:
   • Mortgage Value: The amount of money you are using to pay for your house.
   • Rate of Interest: The yearly interest attached to your mortgage.
   • Period: The time duration over which you will be paying your mortgage (e.g. 30 years, 15 years, etc.).
3. Payment of Balance: The tool will now indicate to you your bi-weekly payment which is half of your monthly payment.
4. Increased Savings: The tool will show the total interest you can save and how much time you could take to pay off the mortgage by making payments on a bi-weekly basis.
5. Make Changes: Set the new values of the loan amount, rate of interest, or the period and observe the savings you can make with these changes to them. Recalculate to view the new results.

Understanding How Biweekly Payments Can Benefit You Financially

While this doesn’t apply to every individual, those that pay their mortgage biweekly will notice certain advantages. For instance, one can save a fair bit on the interest amount associated with the loan:

• 12 payments are made throughout the year when the borrower is on a conventional payment plan, but on a biweekly plan, the borrower pays 26 half payments – or 13 full payments in total. The extra payment reduces the loan amount directly.
• Interest owed towards the loan will lessen roughly around the time when the loan principal is paid off earlier than scheduled. With biweekly payments, the total amount owed during the loan period will also decrease since the loan balance will reduce more quickly.
• When it comes to paying the mortgage, biweekly payments cuts down the years required to pay off the loan. A 30 year mortgage will now require somewhere in the range of 25-26 years instead.
• Most lenders implement monthly compounding when dealing with interest. However, paying biweekly will ensure that the principal owed on the amount borrowed is paid off quicker which lessens the overall interest owed throughout the loan term.

Is Biweekly Mortgage Plan Applicable for Everyone?

It is true that there are great benefits with a biweekly mortgage plan but it doesn’t apply to everyone. Here’s what you should know.

• Most lenders don’t offer biweekly payment plans so this could be a restriction. In this case, you can pay half your monthly payments directly every two weeks.
• There are some mortgages impositions that penalize borrowers for paying off their loan earlier. If you do move to a biweekly plan, be sure to check with your lender first to prevent any penalties or fees.
• For people who receive a monthly paycheck, it could be a bit challenging to adjust with the biweekly payment set up. But for people who do get their salary biweekly, this is a good way to adjust their mortgage payment.

Monthly Payments or Biweekly Payments: Which One is Better?

There are advantages and disadvantages with both monthly and biweekly payments. Now, here is a quick overview so that you can make a better judgment.

• You may find it easier to set a monthly payment because, unlike bi-weekly payments, it’s fairly simple and traditional. Additionally, this is beneficial for people who are paid on a regular basis as they find it easier to work with. Typically, mortgages are set in 15 or 30 year terms, so this works as an advantage too.
• When looking at bi-weekly payments, there is an opportunity to save money on interest and even shorten the length of the loan.
• Works nicely with income payments made every two weeks. However, for people who like to save money and reduce the amount of time for their loans, biweekly payments are a much more beneficial option compared to the standard monthly payments. Dialing up costs is no issue with this model! Furthermore, there is an additional payment required every calendar year which is a downside for many. This also highlights the fact that this approach perfectly caters to those who find it effortless to manage their finances.

Switching to biweekly payments undoubtedly has it’s advantages, but there are certain aspects one must consider beforehand.

• Biweekly payments to mortgages can have their advantages, but do check with your lender to make sure they offer such facilities. There are some scenarios where lenders only provide monthly payment options and charge extra if borrowers try biweekly payments without consulting first. Do assess any potential prepayment clauses that could affect your decision as well.
• Considerable thought must also be given towards one’s ability to handle an additional payment each year. Even though the annual payment is minuscule in comparison to the more biweekly payments, if weak budgeting systems are present, it could do some serious damage to cash flow.