Does Paying Your Mortgage Twice a Month Save Money?

Many homeowners constantly look for ways to save money and repay their mortgages faster. One strategy that’s garnered attention is the idea of paying your mortgage twice a month instead of the traditional once-a-month payment. But does this method truly offer financial benefits, or is it just a mortgage myth?

Does paying your mortgage twice a month help pay it off faster?

Typically, you make your mortgage payment once a month. This traditional method is straightforward—you pay one time each month until the loan is paid off, usually over 15 or 30 years. 

Each payment you make partially covers interest (the cost of borrowing money) and partially reduces your principal (the original loan amount).

If you want to make two payments per month, you have two options: twice-monthly payments and biweekly payments. 

Payment method	Frequency	Total payments per year	Result
Monthly	Once a month	12	12 full payments
Twice-monthly	Twice a month (e.g. 1st and 15th)	24	12 full payments
Biweekly	Every two weeks (e.g. every Friday)	26	13 full payments

Twice-monthly payments

Twice-monthly payments involve dividing your regular monthly mortgage payment in half and paying it twice per month on specific dates, such as the 1st and 15th. 

Does paying your mortgage twice per month save money?

Twice-monthly payments don’t save you money or result in a faster payoff. This is because you still make the equivalent of 12 full payments a year, just in 24 half installments. It may, however, help with budgeting if you get paid twice a month.

Let’s say your monthly mortgage payment is $2,000. 

With the standard monthly payment schedule, you’d pay $2,000 once per month. With twice-monthly payments, you’d pay $1,000 on the 1st and $1,000 on the 15th. After a year, you’d still pay a total of $24,000—the same as you would with one mortgage payment. 

Now you may be thinking, “But won’t making payments more often help you save on interest?” The answer is usually no because lenders can hold partial payments in a separate account until there’s enough to equal a full monthly payment.

Once that full payment amount accumulates, only then will the lender apply it to your principal balance. So even though you’re paying more frequently, from the lender’s perspective, it looks like the same monthly payment coming in over time.

Biweekly payments

Biweekly payments mean paying half of your monthly mortgage payment every two weeks—for example, every other Friday. With this approach, you end up making 26 half-payments per year, which is equivalent to 13 full payments.

Does paying your mortgage biweekly save money?

Absolutely. With biweekly mortgage payments, you make one full extra payment per year. This may seem small, but over the course of a 15 or 30-year mortgage, it can significantly shorten your loan term and the amount of interest you pay. 

For example, let’s say you have a $350,000 mortgage with a 6.5% interest rate and a 30-year term. If you made biweekly instead of monthly payments, you could pay off your mortgage five years and nine months earlier, saving more than $100,000 in interest.

Step one in deciding if you can pay your mortgage twice is to have a budget to determine available excess cash at the end of the average month. Then you can decide how to best deploy that excess cash.

Jim McCarthy

CFP®

Tax implications of paying your mortgage twice a month

Both twice-monthly and biweekly payments generally do not alter the amount of mortgage interest you can deduct from your taxes. 

However, since biweekly payments result in an extra payment each year, you may pay more of your loan’s principal earlier, which could slightly decrease your interest deduction over time. 

But considering the fact that you could save thousands of dollars in interest with biweekly payments, this could outweigh any potential reduction in your mortgage interest deduction. Still, if you have questions, consult a tax professional before implementing this strategy.

Pros and cons of twice-monthly mortgage payments

Pros

• Makes budgeting simple

• Can be ideal if you get paid twice-monthly

Cons

• You don’t pay any extra toward your mortgage

• Doesn’t help you save interest or pay your loan off faster

Pros and cons of biweekly mortgage payments

Pros

• Potentially significant reduction in total interest paid. 

• Can shorten the overall mortgage term.

• Can help you build up equity and get rid of PMI quicker

Cons

• Some lenders charge fees for biweekly payments

• May need to watch out for prepayment penalties

• Biweekly payments don’t improve your credit score

How to start making biweekly payments

If you decide that biweekly payments align with your financial goals, your next step is to set them up. 

First, contact your mortgage lender to see if it allows automatic biweekly payments and how it handles them. Some lenders charge a one-time fee to set up biweekly payments. You might also pay a prepayment penalty for paying your loan off early. Find out if fees apply.

If your lender accepts biweekly payments, ask how the process works. Some lenders apply each half payment immediately, while others hold payments until the full monthly amount is received—so clarify its policy. 

If your lender doesn’t offer biweekly payments, you can manually make extra payments every two weeks or once a year. 

Ask the expert

Jim McCarthy

CFP®

Financial planning is about managing cash flow. If the family has excess cash flow every month, then determining the best use of that excess cash is the next step. Biweekly mortgage payments are one option, but they should be evaluated against other options, like increasing contributions to retirement accounts, to determine which provides the best long-term net outcome.

Alternatives to biweekly and twice-monthly mortgage payments

If twice-monthly payments don’t work for your budget, there are other ways to pay off your mortgage early. Consider these alternatives: 

Tax refunds

Use tax refund money to make a lump sum payment directly to your mortgage principal. This immediately reduces your balance owed.

Bonuses from work

If you receive an annual or quarterly bonus at your job, designate part or all of it to go directly to your mortgage principal for faster payoff.

One-off payments

Make additional payments whenever you have extra cash, such as from a side job, gift, or tax return. Put these extra amounts toward the principal balance.

Refinancing

If interest rates drop significantly, refinance your mortgage to a lower rate which can reduce your monthly payments and total interest paid over time.

FAQ

What’s the difference between twice-monthly and biweekly mortgage payments?

With twice-monthly payments, you make two payments on specific days each month, like the 1st and the 15th. With biweekly payments, you make a payment every two weeks, like on every other Friday. 

How do biweekly payments lead to one extra payment annually?

When you make biweekly mortgage payments, you pay every two weeks instead of once a month. Since there are 52 weeks in a year, you end up making 26 biweekly payments, which is equivalent to 13 monthly payments. 

This extra payment helps you pay down your principal faster and ultimately saves you money on interest.

Will making biweekly or twice-monthly payments affect my loan’s interest rate?

No, making biweekly or twice-monthly payments will not change your loan’s interest rate. But by making more frequent payments, you can reduce how quickly interest accrues, which helps you lower the total interest paid over the life of the loan.

Are there any fees associated with setting up biweekly or twice-monthly payments?

Some lenders may charge a fee for setting up biweekly or twice-monthly payment plans, while others offer these options at no cost. Check with your mortgage lender about any fees before making a decision.

Can I set up biweekly or twice-monthly payments with any mortgage lender?

Not all mortgage lenders offer the option for biweekly or twice-monthly payments, so ask your lender directly. If your lender doesn’t provide a biweekly payment option, you can achieve similar results by making additional principal payments independently.

How can I calculate the potential interest savings from biweekly or twice-monthly payments?

You can use a mortgage payoff calculator to visualize how much time and money you can save with biweekly payments. You must input your loan amount, interest rate, and loan term to get a payoff timeline. 

Some calculators have additional features that let you compare how much you could save with biweekly payments versus making one-off payments each month or year.