Biweekly Mortgage Calculator

Biweekly Mortgage Calculator

What is a Biweekly Mortgage Calculator?

A Biweekly Mortgage Calculator is a financial tool that helps borrowers estimate their mortgage payments when making payments every two weeks instead of once a month. This payment schedule can lead to significant savings over the life of the loan by reducing the total interest paid and potentially shortening the loan term.

Formula for Biweekly Mortgage Calculation

The formula for calculating the biweekly payment on a mortgage is:

\[B = \frac{P \times r \times (1 + r)^n}{(1 + r)^n - 1} \times \frac{12}{26}\]

Where:

• B = Biweekly Payment
• P = Principal Loan Amount
• r = Monthly Interest Rate (Annual Rate / 12)
• n = Total Number of Biweekly Payments (Loan Term in Years × 26)

Calculation Steps

1. Calculate the monthly interest rate by dividing the annual rate by 12.
2. Determine the total number of biweekly payments by multiplying the loan term in years by 26.
3. Apply the formula to calculate the biweekly payment.
4. Calculate the total interest paid by multiplying the biweekly payment by the number of payments and subtracting the original loan amount.

Example

Let's consider a scenario with the following details:

• Loan Amount: $250,000
• Interest Rate: 4% per year
• Loan Term: 30 years

Calculation:

1. Monthly interest rate: 4% / 12 = 0.3333%
2. Number of biweekly payments: 30 × 26 = 780
3. Biweekly payment: $548.99
4. Total interest paid: $178,212.20

In this example, the borrower would pay $548.99 biweekly. Over the 30-year term, they would pay a total of $428,212.20, of which $178,212.20 is interest. This biweekly payment schedule can result in significant savings compared to a traditional monthly payment plan, potentially saving thousands in interest and paying off the loan faster.