biweekly payment strategy
Making half the monthly mortgage payment every two weeks — results in one extra full payment annually.
Example
“The biweekly payment strategy shaved four years off the 30-year mortgage.”
Memory Tip
BIWEEKLY — 26 half-payments equals 13 full payments. One extra per year adds up.
Why It Matters
This strategy can significantly reduce the total interest paid on a mortgage and shorten the loan term by years. By making an extra full payment annually, borrowers build equity faster and can save tens of thousands of dollars over the life of the loan.
Common Misconception
Many people think that biweekly payments simply spread out their monthly obligation more conveniently without any real financial benefit. In reality, the math works because there are 26 biweekly periods in a year, which equals 13 half-payments or one extra full payment annually.
In Practice
A homeowner with a $300,000 mortgage at 6 percent interest making $900 monthly payments would pay $600 every two weeks instead. Over a year, this adds up to $15,600 paid instead of the standard $10,800, with that extra $4,800 going directly toward principal and reducing both interest costs and loan duration.
Etymology
Modern mortgage payoff strategy — exploiting the calendar to make 26 half-payments equal 13 full payments.
Common Misspellings
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See Also
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