Mortgage Payment Frequency Options
When it comes to deciding how often you’d like to make your regular mortgage payments, you can choose which mortgage payment frequency option will best benefit you. You have the option to synchronize your mortgage payments with your pay schedule. In Canada, you can choose from five different mortgage payment options: monthly, bi-weekly, accelerated bi-weekly or accelerated weekly. Since most employees get paid bi-weekly, this schedule option is the most popular.
Some payment frequencies actually accelerate your mortgage repayment allowing you to reduce the total amount of interest you pay over the life of your mortgage. Choosing an accelerated payment also gets you out of mortgage debt years sooner.
What Are Your Options?
Monthly Mortgage Payment
A monthly mortgage payment is when your mortgage payment is withdrawn from your bank account on the same day of every month (i.e. on the 1st). With a monthly mortgage payment, you make 12 payments per year.
Bi-weekly Mortgage Payment
A bi-weekly mortgage payment is when your monthly mortgage payment is multiplied by 12 months and divided by the 26 pay periods in a year. With a bi-weekly mortgage payment, you make 26 payments per year.
Accelerated Bi-weekly Mortgage Payment
An accelerated bi-weekly mortgage payment is when your monthly mortgage payment is divided by two and the amount is withdrawn from your bank account every two weeks. With an accelerated bi-weekly mortgage payment, you still make 26 payments per year but the payment amount is slightly more than a regular bi-weekly mortgage payment.
Weekly Mortgage Payment
A weekly mortgage payment is when your monthly mortgage payment is multiplied by 12 months and divided by the 52 weeks in a year. With a weekly mortgage payment, you make 52 payments per year.
Accelerated Weekly Mortgage Payment
An accelerated weekly mortgage payment is when your monthly mortgage payment is divided by four and the amount is withdrawn from your bank account every week. With an accelerated weekly mortgage payment, you still make 52 payments per year but the payment amount is slightly more than a regular weekly mortgage payment.
The Benefit of Accelerated Payments
The one major difference between regular and accelerated payments is how the payment is calculated. With an accelerated payment option, you end up making roughly one extra payment a year. It’ll cost you a little more on a monthly basis, but will save you thousands in interest and help you pay off your mortgage even sooner.
If you have any questions regarding this topic, please give us a call today at (306) 244-7755 or contact us today!
