1. What is Bi-Weekly Loan Amortization?

Bi-weekly loan amortization calculates payments made every two weeks instead of monthly. This results in 26 payments per year (equivalent to 13 monthly payments), which can significantly reduce the loan term and total interest paid.

2. How Does the Calculator Work?

The calculator uses the bi-weekly payment formula:

Where:

• \( P \) — Principal loan amount ($)
• \( r \) — Bi-weekly interest rate (annual rate ÷ 26)
• \( n \) — Total number of bi-weekly payments (years × 26)

Explanation: The formula calculates the fixed payment amount required to fully amortize the loan over the specified term with bi-weekly payments.

3. Benefits of Bi-Weekly Payments

Details: Making bi-weekly payments instead of monthly can shorten your loan term by several years and save thousands in interest, as you effectively make one extra monthly payment each year.

4. Using the Calculator

Tips: Enter the principal amount in dollars, annual interest rate as a percentage (e.g., 5.25), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with bi-weekly payments?
A: On a 30-year mortgage, bi-weekly payments can typically pay off the loan 4-5 years early and save 15-25% in total interest.

Q2: Is bi-weekly the same as semi-monthly?
A: No. Bi-weekly is every two weeks (26 payments/year), while semi-monthly is twice per month (24 payments/year).

Q3: Do all lenders offer bi-weekly payments?
A: Not all, but many do. Some may charge a setup fee. You can also create your own bi-weekly plan by making half-payments every two weeks.

Q4: How does this compare to making extra payments?
A: Bi-weekly payments are a structured way to make extra payments. The effect is similar to making one extra monthly payment each year.

Q5: Are there any downsides to bi-weekly payments?
A: The main consideration is ensuring your budget can accommodate the slightly higher cash flow requirement compared to monthly payments.