Accelerated bi-weekly calculator - help
The main purpose of this calculator is to show you how much you save by using an accelerated bi-weekly payment system.
Therefore, this calculator is designed to show 2 types of results:
1. Show how much you would pay with accelerated bi-weekly payments
2. how much your mortgage payments would be with monthly payments:
A- How to find your bi-weekly and monthly payments:
- Enter the amount you want to borrow (principal)
- Enter the annual percentage (interest rate)
- Enter the how many years you want to borrow the money (loan term in years)
- Enter your annual taxes (optionnal field)
- Enter your annual insurance (optional field)
- Click on "Calculate Now! "
Click on the image to use this comparison calculator
B- The results:
You will notice that after a year, an accelerated bi-weekly payment system costs more then a monthly payment system. This is normal, because you make 26 payments in a year (52 weeks / 2), not 24 (12 months x 2). It's accelerated because you are, in fact, paying an amount equivalent to 13 monthly payments. Since the extra month is spread in 26 payments the extra cost barely shows in your bi-weekly payments.
If I pay more in a year, where are the savings? Simple, since you repay more and faster, a 25 year loan, for example, will be amortized in only 20 1/2 years! You save 4 1/2 years on your mortgage loan and your interest savings are incredible! $ 23,443 in the above example.
If the bi-weekly payment system was not accelerated, you would pay $ 326.20 every 2 weeks (1 year of monthly payments / 24) instead of the accelerated payment amount of $ 353.38 (1 monthly payment / 2). By paying $ 27.18 more every 2 weeks you save $ 23,443 on your loan! And you repay it 4 1/2 years earlier (18% faster)!