What is the difference between biweekly and semi monthly mortgage payments

You agree that we have no liability for any damages. Summary: 1. Author Recent Posts. Manisha Kumar. Latest posts by Manisha Kumar see all. Help us improve. Rate this post! Cancel Reply. Follow Us. The two methods of payment can make a great deal of difference in the ultimate total of payments made, and the total interest paid.

Bi-weekly payments if accelerated are the equivalent of making 13 monthly payments, whereas semi monthly payments are the equivalent of making 12 monthly payments.

Non accelerated bi-weekly payments are a little less per payment period. Under these factors, the differences between a semi monthly payment and an accelerated bi-weekly payment are as follows:.

Want to discuss your payment schedule? Contact us anytime! If a borrower is aiming for the equivalent of one extra mortgage payment a year, divide the amount of one month's mortgage bill by 24 and add that amount to each semimonthly payment. If you pay half your mortgage every two weeks, which is the premise of the biweekly payment, you end up with the equivalent of an extra mortgage payment after a year.

With 52 weeks in a year, that translates to 26 half payments or 13 full payments. If you pay monthly or semimonthly without additional funds going toward the principal, you're only making 12 regular payments a year. The extra payment from the biweekly method cuts not only the term of the mortgage but also the total interest paid on the loan.

Borrowers interested in setting up semimonthly or biweekly payments must find out if their lender allows for such payment methods and if there is any penalty for paying off the mortgage early.

While making semimonthly payments on your mortgage won't save you much money, making biweekly payments will. Biweekly is not the same as semimonthly.

Since there are 12 months in a year, you would make 24 half-payment on a semimonthly plan. Because there are 52 weeks in a year, if you make a half-payment every two weeks, you end up paying 26 half-payments, or the equivalent of 13 monthly payments.

That seemingly little difference will result in paying off your year loan in about 25 years. Your mortgage payments stay the same throughout the life of your loan.

Every month, your mortgage payment goes to pay the interest on your outstanding balance and whatever is left over goes toward your principal. In the beginning, when your balance is at its highest, most of your monthly payment is eaten up by interest and very little goes to pay down your principal.