How to Set Up a Bi-Weekly Mortgage Payment Schedule to Save Thousands in Interest

The Power of Bi-Weekly Mortgage Payments

By making payments every two weeks instead of once a month, you end up making 26 half-payments a year. This equals 13 full monthly payments instead of the standard 12. That single extra annual payment can shave 4 to 6 years off a 30-year mortgage and save you tens of thousands of dollars in interest. Best of all, you can set this up yourself for free without paying costly administrative fees.

Step 1: Avoid Third-Party Setup Scams

Many third-party financial companies or even some lenders will offer to set up a "bi-weekly equity accelerator program" for a one-time fee of $300 to $500, plus transaction fees of $2 to $5 per payment. Never pay for this service. You can easily achieve the exact same financial results for free using the steps below.

Step 2: Contact Your Mortgage Servicer

Call your mortgage lender or log into your online account portal to see if they offer a free, built-in bi-weekly payment option. Many modern lenders allow you to opt into this schedule directly. If they do, make sure to ask the following questions:

• Ask if there are any administrative fees and insist on a free option.
• Verify that the extra funds will be applied directly to your principal balance, not held in an escrow account or applied to future interest.
• Confirm that your account is set up for automatic draft so you never miss a half-payment.

Step 3: Use the DIY "1/12th Method" (If Your Lender Says No)

If your lender does not officially support bi-weekly payments, or if they charge a fee, do not worry. You can replicate the exact financial benefit yourself using the 1/12th method. Here is how to do it:

• Take your monthly principal and interest payment amount and divide it by 12. For example, if your payment is $1,200, one-twelfth is $100.
• Add this extra amount ($100 in this example) to your regular monthly payment every month.
• By the end of the year, you will have paid an extra $1,200—the exact equivalent of one extra monthly payment.

Step 4: Label Your Extra Payments Correctly

Whether you pay online or mail a physical check, you must specify how the extra money is handled. If you do not, the lender may apply the extra cash to your next month's regular payment (prepaying interest) instead of reducing your debt.

• For online payments: Look for a field labeled "Additional Principal" or "Principal Only" and enter your extra 1/12th amount there. Do not put it in the regular payment field.
• For paper checks: Write two separate checks: one for your standard monthly payment, and a second check with "Principal Only Apply to Loan Balance" written clearly in the memo line.

Step 5: Monitor Your Loan Balance

Log into your mortgage portal quarterly to verify that your extra payments are successfully reducing your principal balance. You should see your principal dropping faster than your original amortization schedule predicted, bringing you years closer to being completely debt-free.