Key takeaways
- A recast lowers your payment using a lump sum. Biweekly payments add about one extra payment a year to pay off sooner.
- Most of the biweekly benefit comes from that 13th payment. You can usually get it free by adding 1/12 to each monthly payment.
- You can combine them: recast for a lower required payment, then pay a little extra when it suits you.
Recasting and biweekly payments both get mentioned as ways to "save on your mortgage," but they do opposite things. A recast uses a lump sum to lower your monthly payment. Biweekly payments add a little extra each year to pay the loan off sooner. Which one fits depends on whether you have a lump sum, and whether you want a smaller payment or an earlier payoff.
How biweekly payments work
Instead of one full payment a month, you pay half your payment every two weeks. There are 52 weeks in a year, so that's 26 half-payments, the same as 13 full monthly payments instead of 12. The extra payment each year goes to principal, which shortens the loan and cuts the interest you pay.
The savings come almost entirely from that 13th payment, not from paying more often. You get nearly the same result by adding one-twelfth of a payment to each monthly payment, which most servicers let you do for free.
How a recast works
You pay a lump sum toward principal, and your servicer re-amortizes the loan: it recalculates your payment for the smaller balance over the time you have left. Your rate and payoff date don't change. Your required payment goes down, usually for a fee of about $150 to $500. More in our recast calculator and guide.
Side by side
Using a $320,000 balance at 6.5% with 27 years left (a principal and interest payment of about $2,098):
| Monthly, as is | Biweekly | Recast with $50,000 | |
|---|---|---|---|
| Cash needed | None | About $2,098 more a year | $50,000 up front, plus fee |
| Required payment | $2,098 a month | $1,049 every two weeks | $1,770 a month |
| Payoff | 27 years | About 22 years, 3 months | 27 years |
| Interest saved | None | About $74,500 | About $56,200 |
| Main benefit | Earlier payoff | Lower payment |
Biweekly figures here assume the extra payment is applied to principal as it's paid. Actual results depend on how your servicer credits partial payments.
Which one fits your situation?
Biweekly (or one extra payment a year) makes more sense if
- You don't have a lump sum, but you can afford a bit more each month.
- Your goal is to be mortgage-free sooner.
- You're paid every two weeks and like matching your payments to your paychecks.
- Your loan can't be recast, as with most FHA, VA, and USDA loans. Extra principal payments work on almost any loan.
A recast makes more sense if
- You have a lump sum, such as proceeds from selling a previous home, and want it to lower your monthly costs.
- Your budget would benefit from a smaller required payment.
- You want flexibility: a lower minimum, with the option to pay extra when it suits you.
Watch out for biweekly program fees
Some third-party companies sell biweekly payment programs that collect half-payments from your account and pass them on to your servicer. Some charge a setup fee, a per-payment fee, or both, and some hold your money until a full payment has built up before sending it. Before you sign up for one, check:
- Who is running the program: your servicer, or a separate company?
- What does it cost, in total, per year?
- When is each half-payment actually sent to your servicer and applied to the loan?
You can usually get the same effect without fees by adding a set amount of extra principal to each monthly payment (on the example loan, about $175), or by making one extra payment a year. Also check with your servicer before sending partial payments yourself: some hold them in a suspense account until a full payment arrives instead of applying them right away.
You can do both
The two aren't exclusive. You could recast after a lump sum to lower your required payment, then pay a bit extra each month to keep shortening the loan. On the example loan, recasting with $50,000 and then paying one-twelfth extra on the new $1,770 payment would pay the loan off in about 22 years, 3 months, while keeping your required payment at $1,770 if you ever need to drop back to it.
And if you have a lump sum but don't need a lower payment, there's a third option: pay it down and don't recast. That saves the most interest. See recasting vs. extra payments.
Frequently asked questions
Do biweekly payments lower my monthly payment?
No. Each half-payment is half of your regular payment. You pay slightly more over a year, which is what shortens the loan.
Does a recast shorten my loan?
No. Your payoff date stays the same. Only your payment drops.
Which saves more interest?
It depends on the amounts. In the example above, biweekly payments save more interest than a $50,000 recast over the life of the loan, but they require paying more every year. Paying down a lump sum without recasting saves the most.