Saving Interest

• Making the equivalent of 13 monthly payments each year, instead of 12, means you are paying off more principal each year. Less principal means less interest. However, Bankrate.com reports a common myth about biweekly mortgages is that they reduce the compound interest on your mortgage. Your loan servicing institution is probably paying your loan monthly, meaning that you are loaning the servicing institution half of your mortgage payment, free of interest, for at least two weeks every month.
  
  

Faster Loan Payoff

• Making the equivalent of a 13th month payment every year does mean you pay off the mortgage sooner. Bankrate.com says you can usually chop six to eight years off a 30-year mortgage.
  
  

Disadvantages

• Lending institutions charge a fee to set up a biweekly mortgage plan. Some charge a one-time upfront fee, typically ranging from $295 to $379, while others charge a monthly fee, often from $4 to $9 a month, according to Bankrate.com. Also, if you are financially strapped or have other savings needs, such as retirement or college education for your children, a biweekly mortgage diverts some money that could be going to meet those needs.
  
  

Considerations

• Another advantage of paying a mortgage biweekly is that it can help make budgeting easier. However, if you want to achieve the goals of saving interest and paying off the mortgage faster without getting a biweekly mortgage, you can do so by making one extra monthly payment every year. The important point to remember is to indicate on your payment coupon that the extra money is to go toward paying off principal.