How the Extra Payment & Biweekly Calculator works

The formula

Step by step

1. The baseline loan is amortized month by month at your rate and term.
2. The accelerated loan repeats the amortization, adding your extra principal to every monthly payment, until the balance reaches zero.
3. Time saved = baseline payoff month − accelerated payoff month. Interest saved = the difference in total interest.
4. Biweekly plans are modeled as their cash-flow equivalent: 26 half-payments a year equal 13 monthly payments — one extra full payment per year (extra = P&I ÷ 12 each month).
5. A worked example using the calculator's own defaults: a $336,000 loan at 6.75% over 30 years. Principal and interest are $2,179.29 a month, and left alone the loan costs $448,544 in interest across 360 payments. Add $300 a month to principal and it is gone in 257 months — 21 years 5 months — for $299,072. That is $149,472 of interest saved and eight years seven months off the term.
6. The biweekly comparison on the same loan: one extra full payment a year is $2,179.29 ÷ 12 = $181.61 a month. That clears the loan in 288 months exactly — 24 years — saving $105,995 and six years. Less than the $300 plan, as it should be, because it is less money.
7. The saving is wildly non-linear in the extra amount, because every dollar of extra principal removes every future month of interest on that dollar. $181.61 a month buys six years; $300 buys eight years and seven months. Doubling the extra payment never doubles the years saved.

Assumptions & limitations

• A fixed rate and no prepayment penalty; extra amounts are applied to principal.
• Extra payments start immediately and continue every month.
• The biweekly model captures the extra-annual-payment effect, the dominant driver of biweekly savings.
• Extra payments are assumed to reach principal. That is the failure mode worth naming: servicers commonly apply an unlabelled overpayment to the next scheduled payment or to escrow instead, in which case none of the savings above occur. The extra has to be designated as a principal reduction.
• Prepayment penalties are excluded. They do not normally apply to small regular extra principal, but they can apply to paying off a large amount at once, and adjustable-rate loans carry them more often than fixed ones.
• A negative extra payment is clamped to zero rather than modeled as underpayment, and the accelerated schedule is capped at the original term. The biweekly model captures the extra-annual-payment effect and not the small additional gain from paying every fourteen days.