1 October 2012
This way you’ll pay off your mortgage even faster, because in the end you’ll make the equivalent of one extra monthly payment each year.
Standard payments
There are different standard payment options, such as:
- weekly
- biweekly
- semi-monthly
- monthly
Actually, there’s no great difference between these types of payments when it goes to the total amount you will pay over a year. In other words, you won’t have much saving if you switch from one standard payment option to another.
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Payment options in details |
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Payment frequency |
Description |
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Monthly |
You make one payment each month for a total of 12 per year. |
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Semi-monthly (twice a month) |
You make two payments each month for a total of 24 per year. With this type of payments the total amount you’ll pay over the year is just the same as with the monthly payment. |
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Biweekly (every two weeks) |
You make one payment every two weeks. As there are 52 weeks in a year, the total number of payments over the year will be 26 (52 ÷ 2). But in the end the total payment over the year is still the same as with the monthly payment (monthly payment x 12 months ÷ 26). |
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Accelerated biweekly |
You make a half of the monthly payment every two weeks. As there are 52 weeks in a year, you will make 26 payments a year (52 ÷ 2). In order to calculate the amount of your accelerated biweekly payments, you should divide your monthly payment by two (e.g. $1,000 ÷ 2 = $500). With this type of payment frequency, you will make the equivalent of one extra monthly payment each year. It means that you’ll pay off your mortgage much faster and save money in interest charges. |
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Weekly |
You make one payment each week for a total of 52 payments per year. As a result, the total annual payment stays the same as with the monthly payment. |
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Accelerated weekly |
You make one quarter of the monthly payment every week. In order to calculate the amount of your accelerated weekly payments, you should divide your monthly payment by four (e.g. $1,000 ÷ 4 = $250). With this type of payment frequency, you will make the equivalent of one extra monthly payment each year. You’ll also be able to pay off your mortgage much faster and save in interest charges. |