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Biweekly vs Monthly on a $300,000 Mortgage
A $300,000 mortgage on a biweekly plan has 26 half payments a year instead of 12 full ones. See what that does at 6.1 percent over 30 years.
The biweekly plan saves $77,050 of interest and 5 years 6 months of time on the starting figures.
How the two plans differ
Take the usual monthly payment of $1,817.98 and cut it in half to get $908.99. Pay that amount 26 times a year. Because 26 halves make 13 full payments the loan shrinks faster than on a monthly plan.
Worked example
Monthly payments of $1,817.98 clear a $300,000 loan in 30 years. Biweekly payments of $908.99 clear it in 24 years 6 months.
The biweekly plan sends $1,817.98 more to principal each year. That is where the saving comes from.
Questions about this calculator
Where does the extra $1,817.98 a year on a $300,000 loan go?
It goes straight to principal. Twenty-six half payments equal 13 monthly payments, so one extra payment of $1,817.98 is made each year on this $300,000 loan.
Do lenders offer biweekly plans on $300,000 loans?
Some do and some charge a fee. Others only take monthly payments. Ask your lender first. Compare the saving of $77,050 here with any fee.
Could adding $151.50 to each monthly payment on $300,000 match the biweekly plan?
It saves $76,261 of interest and ends the loan 5 years 6 months sooner. The biweekly plan saves $77,050. Both send about one extra monthly payment a year to principal.
Does the biweekly result on $300,000 assume interest builds every two weeks?
It does. The balance earns a fraction of the 6.1 percent yearly rate each period. Some lenders only apply a biweekly payment once a month, which would reduce the saving of $77,050.
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This page is for education only and is not financial or tax advice.