How to Calculate Biweekly Mortgage Payments

Many banks and lenders offer borrowers the option of paying their loans in biweekly installments, rather than on a monthly schedule. Borrowers who pay off a loan biweekly make 26 payments each year since there are 52 weeks in a year.

Your biweekly payments are computed from the annual interest rate, the length of the loan period, and the principal. The steps below will show you how to calculate biweekly payments by hand, but you can also use the mortgage calculator on the left. It works for home mortgage, auto, or personal loans.

Step (1)
Express the annual interest rate as a decimal, and call this number R. For example, if the annual interest rate is 7.8%, then use R = 0.078.

Step (2)
Multiply the number of years by 26 to find the number of two-week periods, and call this number K. For example, if you have a 25-year mortgage, K = 650.

Step (3)
Call the principal of your loan P. The principal is the amount you borrow when you take out a home loan or auto loan. It is the price of the house or car minus the down payment.

Step (4)
Now compute a number called Z that is based on the values of R and K, and the compounding frequency. If your biweekly mortgage interest is compounded biweekly, then the formula for Z is

Z = (1+R/26)^K.

If your biweekly mortgage interest is compounded monthly (as is often the case in the US), use the formula

Z = (1 + R/12)^12K/26.

If in doubt, use the second equation for Z. Biweekly mortgages are often quoted with interest rates that are compounded 12 times a year.

Step (5)
Finally, compute the number (R/26)PZ/(Z-1). This number is your biweekly payment.

You can also calculate the total amount of interest paid over the course of the loan. Simply multiply the biweekly payment by the number of payments, and then subtract the loan principal. For example, if your loan payments are $270 every two weeks for 25 years, and the amount borrowed is $95,000, then your total interest is

($270)(650) - $95000 = $80500.

© Had2Know 2010