Simple Interest Bi-weekly Mortgage Definition

A simple interest bi-weekly mortgage is a type of mortgage that requires a mortgage payment be made bi-weekly (a payment every other week), and each payment is immediately applied to the mortgage loan resulting in a principal decrease every two weeks.

This bi-weekly processing reduces the principal faster than monthly payments and results in lower overall interest charges; however, this may be offset by additional processing charges assessed on the mortgage. Potential homebuyers should carefully examine the terms of a simple interest bi-weekly mortgage to determine if it will result in a lower total cost of ownership.