This calculator will help you to compare the costs between a loan that is paid off on a bi-weekly payment basis and a loan that is paid off on a monthly basis. You can use this for any type of loan including home loans. We also offer a separate biweekly mortgage calculator.
Adding & Subtracting Time
Are you starting biweekly payments in a middle of a loan schedule?
- Common loan terms: Most home loans are structred as 30-year loans, which is 360 monthy payments. A 20-year loan is 240 monthly payments, A 15-year loan is 180 monthly payments, a 10-year loan is 120-monthly payments and 5 year loan is 60 monthly payments.
- Converting years to months: multiply the years in the loan term by 12.
- Payments made: If you do not know how much time you have remaining you can calculate the total number of payments in the initial loan term & then subtract how many payments you have already made. If you are 42 months into a 30-year (360 monthly payment) mortgage then you have 318 monthly payments remaining.
- Partial years: If you had 244 months remaining you could either enter 20 years and 4 months or 0 years and 244 months. If you enter both values they will be summed. For example, 1 year and 12 months will be added to 2 years.
Are you paying high interest rates on your debts? If so you may be able to take advantage of low personal loan rates, consolidate your debts using home equity, or refinance your local mortgage at today's low rates. Rate tables for various loan products are shown in the tabs below.
Homeowners: Leverage Your Home Equity Today
Our rate table lists current home equity offers in your area, which you can use to find a local lender or compare against other loan options. From the [loan type] select box you can choose between HELOCs and home equity loans of a 5, 10, 15, 20 or 30 year duration.
Current Personal Loan Rates
Current Local Mortgage Rates
The following table shows current local 30-year mortgage rates. You can use the menus to select other loan durations, alter the loan amount, change your down payment, or change your location. More features are available in the advanced drop down
Should You Split Your Monthly Payment?
When you start paying back your loan payments, on longer loans (such as mortgages) the majority of your monthly payments will be interest. The larger your loan balance, the more interest you will pay. As your principal is paid down, your interest payments will decrease, as well, and the ratio of your payments will shift toward paying more principal each month.
One popular way that some homeowners & other borrowers pay down their principal more quickly is to make biweekly payments. Instead of paying one monthly payment, they pay half the payment twice a month.
How Bi-Weekly Payments Work
The concept of a twice-monthly payment is a bit misleading. Bi-weekly is not the same as twice a month. There are 52 weeks in the year, which means that on a biweekly payment plan, you would make 26 payments per year. However, there are only 12 months in the year, and if you were making two payments each month, you would only be making 24 payments a year.
By making payments every other week, you are actually paying an additional loan payment each year. Therefore, if your monthly payment is $1,500 a month, you would pay $18,000 a year with monthly payments. If you made payments every other week, you would end up paying $19,500 for the year.
Advantages
The primary advantage of more frequent payments is paying down your principal balance faster, reducing the amount of interest you pay and shaving years off your loan. For example, if you have a 30-year $250,000 mortgage at a 5 percent interest rate, you will pay $1,342.05 per month, not counting property taxes and insurance. You would pay $233,139.46 in interest over the life of the loan making the standard monthly payments. If you switched to a biweekly plan, you would pay only $189,734.44 in interest and will cut four years and nine months off the life of your loan. Depending on the terms of your loan, switching payment frequency could cut your loan by as much as eight years.
You don't necessarily have to pay every other week to get the savings. You can just divide your mortgage payment by 12 and add 1/12th the amount to your payment each month. Therefore, if your regular payment is $1,500 a month, you would pay $1,625 each month instead. Some people also use tax refunds, performance bonuses & other similar streams to help create a 13th yearly payment.
Make sure that any additional payments you make will be applied directly to the principal.
The same sort of benefits which happen on mortgages also apply to other forms of lending. Typically other loans have a shorter duration for interest to accrue, but they also typically come with higher interest rates. Cars depreciate quickly & unsecured loans have higher rates of interest to compensate for the risk of non-payment.
Precautions
Unfortunately, switching may not be as simple as writing a check every two weeks. If you are already on an automatic payment plan, you will need to find out from your lender if you can cancel or change it. You will then need to find out if your lender will even accept biweekly payments, or if there is a penalty for paying off your loan early.
Some services offer to set up bi-weekly payments for you. However, these companies may charge you a fee for the service (as much as several hundred Dollars), and they may only make the payment on your behalf once a month (negating any savings).
Instead, you must make the payment directly to the lender yourself, and you must be sure that it will be applied right away and that the extra will be applied toward your principal.
As long as you have strong will, it's better to make the payments directly instead of signing up for an automatic payment plan since it will give you more flexibility in case of lean times.
Determining Your Savings
Use the above calculator to determine how much you can save by switching to bi-weekly mortgage payments. You'll also find out how much more quickly you can pay off your loan. Play with different amounts to see how much you can save by paying more each month.
Home Buyers May Qualify For Low Downpayment Home Loan Options
Explore conventional mortgages, FHA loans, USDA loans, and VA loans to find out which option is right for you.
Find Out What Loan You Qualify For & Get Pre-Approved Today
Check your options with a trusted Los Angeles lender.
Answer a few questions below and connect with a lender who can help you save today!
Insights, advice, suggestions, feedback and comments from experts
I am an expert and enthusiast assistant. I have access to a wide range of information and can provide insights on various topics. I can demonstrate my expertise by providing accurate and detailed information based on search results and my knowledge base.
Now, let's dive into the concepts mentioned in this article:
Bi-Weekly vs Monthly Loan Payments
The article discusses the comparison between loans that are paid off on a bi-weekly payment basis and loans that are paid off on a monthly basis. It states that you can use the provided calculator to compare the costs of different types of loans, including home loans.
Common Loan Terms
The article mentions common loan terms for home loans. It states that most home loans are structured as 30-year loans, which is equivalent to 360 monthly payments. Other common loan terms include 20-year loans (240 monthly payments), 15-year loans (180 monthly payments), 10-year loans (120 monthly payments), and 5-year loans (60 monthly payments).
Converting Years to Months
To convert years to months in a loan term, you need to multiply the number of years by 12. For example, a 20-year loan would be equivalent to 240 monthly payments.
Calculating Remaining Payments
If you don't know how much time you have remaining on your loan, you can calculate the total number of payments in the initial loan term and then subtract the number of payments you have already made. For example, if you are 42 months into a 30-year mortgage (360 monthly payments), you have 318 monthly payments remaining.
Partial Years
The article explains how to handle partial years in loan calculations. If you have a certain number of months remaining, you can either enter the years and months separately or sum them up. For example, if you have 244 months remaining, you can enter either 20 years and 4 months or 0 years and 244 months. If you enter both values, they will be summed. For instance, 1 year and 12 months will be added to 2 years.
Advantages of Bi-Weekly Payments
The article highlights the advantages of making bi-weekly payments. One primary advantage is that more frequent payments help pay down the principal balance faster, reducing the amount of interest paid and shortening the loan term. By making bi-weekly payments, borrowers can potentially save on interest and pay off their loans earlier. The article provides an example of how switching to a bi-weekly plan can save interest and cut years off the life of a mortgage loan.
Precautions and Determining Savings
The article also mentions some precautions and considerations when switching to bi-weekly payments. It advises checking with the lender to determine if they accept bi-weekly payments and if there are any penalties for paying off the loan early. It also suggests making sure that any additional payments made are applied directly to the principal. The article provides a calculator to determine potential savings and the accelerated payoff timeline when switching to bi-weekly mortgage payments.
I hope this information helps you understand the concepts discussed in the article. If you have any further questions or need more details, feel free to ask!
