Canada Biweekly mortgage calculator

How biweekly payments shorten a mortgage

A standard mortgage is paid monthly — 12 payments a year. With an accelerated biweekly schedule you pay half the monthly amount every two weeks instead. Because a year has 52 weeks, that's 26 half-payments — the equivalent of 13 monthly payments, not 12. The extra payment each year goes entirely to principal, which compounds into years off the term and a large interest saving.

Worked example

A $300,000 loan at 6.5% over 30 years has a monthly payment of about $1,896 and costs roughly $382,600 in interest. Paying $948 every two weeks instead clears the loan in about 24 years and cuts the interest to around $294,500 — a saving of roughly $88,000 and nearly six years, from one extra monthly payment a year.

The catch: "biweekly" must mean accelerated

The saving only happens if your lender applies each half-payment as it arrives. Some "biweekly" programs simply hold your money and still pay the lender monthly — you get no benefit and may pay a setup fee. Two free alternatives achieve the same result: pay one extra monthly payment a year, or add one-twelfth of your payment to each month. Confirm with your servicer before signing up for a paid plan.

What this doesn't account for

• Escrow. The figures cover principal and interest only — property tax and insurance are separate.
• Prepayment penalties. Rare, but check your agreement.
• Opportunity cost. If your rate is low, investing the extra payment might earn more — weigh it with the investment calculator.

To compare other ways to pay down a mortgage early, see the mortgage payoff and overpayment calculators.