Paying your mortgage biweekly — half your payment every two weeks, to be exact — can be a smart way to reduce your interest costs and even pay off your loan sooner.

But is it right for everyone? Definitely not.

Are you considering skipping those monthly mortgage payments in favor of a half-payment every two weeks? Here are the pros and cons you’ll want to consider:

Advantages & Disadvantages of Biweekly Mortgage Payments

The biggest benefit of paying every two weeks is that it essentially means you’re making an extra payment every year. (Paying every two weeks equals 13 months of payments; paying monthly only equals 12!) If you’ve got a 30-year loan, that can help you pay off your mortgage two years sooner or more.

Other pros include:

  • It can reduce the total interest you pay over time. Because you’re lowering your balance every two weeks, your interest costs will reduce that often, too. Your extra annual payment can also make a dent in that interest paid over time.
  • It can make payments more manageable. For many people, paying $600 every two weeks is easier than making a large, $1,200 payment all at once. It might also make budgeting easier on the whole.
  • It can help you build equity up faster. You’ll own a bigger stake of the home faster. That means more in profits when you sell the property or more to tap via a cash-out refinance.
  • It can help you drop private mortgage insurance sooner. If you’re paying PMI, biweekly payments will help you reach that 20 percent equity point faster, allowing you to cancel PMI and reduce your mortgage costs.

On the downside, biweekly payments do actually require more in payments annually. If you’re on a tight budget, this might cause cash flow problems in your household.

Other disadvantages include:

  • Not all loan servicers offer this option. Some may accept your biweekly payments, but they really only make payments toward the loan on a monthly basis. This means your extra work has virtually no effect at all on your balance or interest paid. 
  • Some lenders charge a fee for biweekly payments. Depending on the fee, it might not be cost-effective to enter into this type of program.
  • Some biweekly payment plans are permanent agreements. This means you can’t switch back to monthly payments if cash is tight.

Usually, your regular payment will go toward principal and interest, but it may also be possible to make principal-only payments at any time (as long as you’re also making your monthly payment). The extra payments on the principal can reduce the amount of interest paid over time. You may need to specify your extra payment should only go toward the principal, so be sure to speak with your lender about it first.

Ready to buy a home? Contact an Embrace loan officer today. We’ll help you find the mortgage that fits your budget and financial goals.