The Biweekly Mortgage: Is It Worth It in 2025?

Have you come across offers promising to save you thousands on your mortgage and help you pay off your home years earlier? These pitches often promote a biweekly mortgage plan and make enticing claims:

• No closing costs!

• No refinancing!

• Save thousands!

• Cut years off your mortgage!

While these offers may sound like the solution to your financial goals, it's essential to understand what a biweekly mortgage plan entails and whether it’s something you need.

What Is a Biweekly Mortgage Plan?

In a traditional mortgage, you make 12 monthly payments per year. With a biweekly mortgage plan, you make 26 half-payments per year, which equates to 13 full payments annually. That extra payment is applied directly to your loan’s principal balance, helping you reduce your loan term and interest costs.

Example:On a $300,000 loan at a 6.5% interest rate, switching to a biweekly plan could save over $70,000 in interest and shave nearly six years off your 30-year mortgage term.

How It Works

Biweekly mortgage companies act as middlemen:

1. They deduct half of your mortgage payment from your bank account every two weeks.

2. These funds are held in a trust account until your lender requires the full monthly payment.

3. Once enough funds accumulate, an additional payment is made to your principal balance.

   
   

While this method can save you money, you’re essentially paying someone to manage your payments—something you can do yourself for free.

The Risks of Biweekly Mortgage Plans

1. Trust Account Vulnerabilities

   • Funds held in trust accounts could be susceptible to accounting errors, mismanagement, or fraud.

   • If the biweekly company fails to make your payment, you are still responsible for any late fees or penalties.

2. Hidden Fees

   • Biweekly plans often charge setup fees ranging from $150 to $350, plus transaction or maintenance fees for each withdrawal.

3. No Immediate Impact

   • Your first principal reduction typically doesn’t happen until enough funds accumulate, which could take a year or more.

   
   

DIY Alternatives to a Biweekly Plan

You can achieve the same results—and save even more—by managing the process yourself. Here’s how:

1. Add Extra Payments Monthly

   • Divide your monthly mortgage payment by 12 and add that amount to each monthly payment as an extra principal reduction.

   • Example: If your mortgage is $2,000/month, add $166.67 to each payment.

2. Set Up Automatic Payments

   • Most mortgage lenders allow you to automate payments, including extra principal contributions, through their online portals.

3. Lump-Sum Payments

   • Instead of making biweekly payments, make a one-time lump-sum payment each year directly to your principal.

   
   
   
   

The Cost-Benefit Analysis

Biweekly Mortgage Plan:

• Saves money on interest but includes fees for setup, transactions, and maintenance.

• Funds are held in a third-party trust account, adding potential risk.

DIY Approach:

• Saves more money because you bypass fees.

• Gives you direct control over your payments, reducing risks associated with third-party intermediaries.

Example Savings:

On a $300,000 loan at 6.5% interest:

• Biweekly Plan: Saves $70,000 in interest and cuts 6 years off the loan.

• DIY Monthly Extra Payment: Saves $72,000 in interest and cuts 6.3 years off the loan, with no fees.

Do You Need a Biweekly Mortgage Plan?

If you struggle with financial discipline, a biweekly plan may provide structure. However, with modern banking tools, it’s easy to automate extra payments directly to your lender—without incurring fees or risks.

Key Takeaway: The biweekly mortgage plan is a solid concept, but you don’t need to pay someone else to implement it. Take charge of your finances and enjoy the same benefits—plus more savings—by managing your extra payments independently.