What it does is to use the extra payment you make every year to reduce the balance, which in turn reduces interest payments. The loan is paid off early, just as it would have been if you had begun with a mortgage carrying a shorter term. In fact, borrowers taking out a new loan who are attracted to the accelerated repayment schedule on a biweekly, are usually better off with a conventional loan having a shorter term. If you already have a 30-year mortgage and are attracted by the prospect of paying it off early, here are some ways you can do it yourself. Use your bonus.
Many people receive bonuses at the end of the year.
Increase your monthly payment. Simply increase your current monthly payment by the amount you feel you can comfortably afford. Check with your lender as to whether you should write a separate check for the additional amount. Establish a biweekly deposit account. Start a new account with a bank that has an automatic payment privilege, and arrange for it to make your monthly mortgage payment every month.