This free online Biweekly Mortgage Payment Calculator will calculate the bi-weekly payment and the time and interest savings that will occur if you switch from making monthly mortgage payments to paying 1/2 of your mortgage payment every two weeks.
Plus, unlike other online bi-weekly mortgage calculators, the biweekly mortgage payment calculator on this page will also calculate the future value of the invested early-payoff savings.
In case you're not familiar with it, a biweekly mortgage payment is arrived at by dividing your monthly payment in half. The idea is that by making one-half of your mortgage payment every two weeks, you will end up making a total of 13 monthly payments per year. This can save you thousands of dollars in interest charges and allow you to pay off your home loan years ahead of schedule -- while barely noticing the increased principal prepayment.
Because making biweekly payments results in the prepayment of principal ahead of the mortgage terms, there are unscrupulous mortgage companies that take offense to you cutting into their future profit margins. While some will simply escrow your prepayment and apply payments as they were scheduled (thumbing their nose at your early payoff efforts), others will go so far as to assess a penalty for prepaying the principal.
So before you start making bi-weekly payments, be sure to check with your mortgage company to make sure your principal prepayments will be applied as you make them, free of any prepayment penalties.
As you will discover when using the biweekly mortgage payment calculator, making 1/2 of your payment every two weeks can save thousands of dollars in interest costs and shave years off of the repayment term. However, once you've paid your mortgage off ahead of schedule, if you simply spend the money you were paying on your mortgage you could lose thousands of dollars in lost interest earnings.
Since you were already accustomed to making mortgage payments, why not continue to make those payments -- but into an investment that will actually pay you interest instead of having to pay interest to others. If you did that, you may just double the bi-weekly payment savings by the time the mortgage was originally scheduled to be paid off.
With that, let's use the Biweekly Mortgage Payment Calculator to calculate the bi-weekly payment and the time and interest you will save by making 1/2 of your monthly payment every two weeks.
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New mortgage amount: The new home loan amount (principal borrowed).
Annual interest rate: The annual percentage rate (APR) of the home loan. Enter as a percentage (for .06, enter 6%). This is the rate at which lending institutions rent money to you. If they are charging you rent by the month, they take your balance at the end of the month and multiply it by 1/12 of annual rental rate. They then deduct their rent from your payment and the what's left is used to lower the amount you owe them.
Mortgage term in number of years: The term of the home loan in number of years. The longer you take to repay the money you borrow, the more you will pay in interest charges. If you purchase a home on a 30-year mortgage you could end up paying 2-3 times the purchase price of the home -- depending on the interest rate.
Expected percentage return on investments: The annual percentage return you expect to earn on future investments. The biweekly mortgage payment calculator will use this figure to estimate the future value of invested biweekly savings.
Payment result row: The first column shows how much your monthly principal and interest payment will be. The second column shows how much your biweekly payment will be (1/2 of your monthly payment). The third column is not applicable since payments are made at different time intervals.
Months to payoff result row: The first column shows how many months it will take to pay off the home loan when making monthly payments. The second column shows how many months it will take you to pay off the home loan when making biweekly payments. The third column will show you how many months sooner you will pay off the home loan by making biweekly payments instead of monthly payments.
Interest cost result row: The first column shows how much interest you will pay if you pay off the home loan by making monthly payments. The second column shows how much interest you will pay if you pay off the home loan by making biweekly payments. The third column will show you how much interest you will save by making biweekly payments instead of monthly payments.