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Biweekly vs Monthly on a $500,000 Mortgage
Biweekly payments can shave time off a $500,000 loan. The page starts at 6.1 percent over 30 years so you can see the saving.
The biweekly plan saves $128,417 of interest and 5 years 6 months of time on the starting figures.
How the two plans differ
A biweekly plan pays half the monthly payment every two weeks. A year has 26 of those half payments, which equals 13 full monthly payments. The extra month of payments goes to principal. On $500,000 at 6.1 percent the half payment is $1,514.99.
Worked example
A $500,000 loan on the monthly plan costs $590,791 in interest. On the biweekly plan it costs $462,374.
That is 5 years 6 months sooner and $128,417 less interest.
Questions about this calculator
Where does the extra $3,029.97 a year on a $500,000 loan go?
It goes straight to principal. Twenty-six half payments equal 13 monthly payments, so one extra payment of $3,029.97 is made each year on this $500,000 loan.
Do lenders offer biweekly plans on $500,000 loans?
Some do and some charge a fee. Others only take monthly payments. Ask your lender first. Compare the saving of $128,417 here with any fee.
Could adding $252.50 to each monthly payment on $500,000 match the biweekly plan?
It saves $127,101 of interest and ends the loan 5 years 6 months sooner. The biweekly plan saves $128,417. Both send about one extra monthly payment a year to principal.
Does the biweekly result on $500,000 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 $128,417.
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This page is for education only and is not financial or tax advice.