Yes, and almost all of the saving comes from paying more each year. Paying half the monthly payment every two weeks on a loan of 250,000 at 6% over 30 years saves 62,030 in interest and repays the loan in about 294 months instead of 360. A year has 26 two-week periods, so the half payments add up to 13 monthly payments a year: 1,498 more than paying monthly.
Paying a twelfth extra with each monthly payment does almost the same: 228,208 in interest against 227,565 for the two-week schedule, a difference of 643.
Three ways to pay the same loan
The same loan and the same rate in every row:
| Schedule | Each payment | Paid per year | Months to repay | Total interest |
|---|---|---|---|---|
| Monthly | 1,498.88 | 17,987 | 360 | 289,595 |
| Half the monthly payment every two weeks | 749.44 | 19,485 | 294 | 227,565 |
| Monthly, plus a twelfth extra | 1,623.78 | 19,485 | 295 | 228,208 |
What the example leaves out
The saving depends on the lender applying each payment when it arrives. Fees for a payment service, or charges for repaying early where they apply, reduce it.