Choosing the Right Mortgage Payment Frequency for You

Payment schedules are an essential aspect of managing your mortgage payments. There are several options available, ranging from monthly to semi-monthly, bi-weekly, accelerated bi-weekly, or accelerated weekly payments. Each of these options has its own unique characteristics and benefits, which we’ll explore in more detail below:

Monthly payments involve making a single large payment once a month, with 12 payments per year. This is the default option for most mortgages, but it can also mean added burden as the payment comes from a single employment pay period.

Example: $750K mortgage, 3-year fixed rate, 5.34%, 30-year amortization you would have a monthly payment of $4,156.19.

Semi-monthly payments involve making payments twice a month typically on the 15th and 30th/31st with 24 payments per year. This option can be helpful for individuals who receive their income twice a month and can help with budgeting.

Example: $750K mortgage 3-year fixed rate 5.34% 30-year amortization you would have semi-monthly payments of $2075.81 (half of accelerated bi-weekly payments) with similar term and amortization savings.

Bi-weekly payments are made every two weeks, with 26 payments per year. This option can save you money over the term of your mortgage, as you pay off your mortgage quicker and with less interest than with monthly payments.

Example: $750K mortgage, 3-year fixed rate, 5.34%, 30-year amortization you would have a bi-weekly payment of $1,915.98 with term savings of $177 and total amortization savings of $1,769.

Accelerated bi-weekly payments, also with 26 payments per year, involve higher payments than regular bi-weekly payments. This option is guaranteed to save you significant money over the term of your mortgage and allows you to split your mortgage payment into smaller payments. It’s ideal for households who get paid every two weeks. You’re essentially making one extra monthly payment each year.

Example: $750K mortgage, 3-year fixed rate, 5.34%, 30-year amortization you would have accelerated bi-weekly payments of $2,078.10 with term savings of $1,217 and total amortization savings of $145,184. Plus, you would save 4 years, 12 months of payments by reducing scheduled amortization.

Weekly payments involve making a payment every week, with 52 payments per year. Like bi-weekly payments, this option can also save you money over the term of your mortgage.

Example: $750K mortgage, 3-year fixed rate, 5.34%, 30-year amortization you would have weekly payments of $957.50 with term savings of $253 and total amortization savings of $2,526. You can move to accelerated weekly payments to save even more!

Additionally, most mortgage products include prepayment privileges that allow you to pay up to 20% of the principal per calendar year. This can help reduce the length of your mortgage.

Monthly and Accelerated bi-weekly payment options are typically offered by all lending institutions and are the most popular payment frequencies chosen by borrowers.

To determine what payment frequency is best for you, consider your monthly cash flow. Choosing the right payment frequency can help you manage your cash flow and save money in the long run. So, take the time to understand your options and make an informed decision. Don’t hesitate to contact me with any questions you may have!