Which payment frequency should you choose?

Monthly mortgage payments are standard — but choosing another option can shave time off your mortgage and thousands from your interest costs.

But should you? Or can you? In 20 years, when your hindsight is 20-20, you may wish you had.

Like to go fast? Accelerate your payments to save more.

Here are the 6 different payment types available (assuming your mortgage fine print agrees): Monthly, Semi-Monthly, Biweekly, Biweekly Accelerated, Weekly and Weekly Accelerated.

Check out the scenarios below. You'll see how a more frequent or accelerated schedule can save you cash and pay off your mortgage faster.

$500,000 conventional mortgage 5.0% 5-year fixed rate 25-year amortization Example Scenario $2,908 Monthly Standard 1 time per month 12 times per year

Monthly is the most common payment frequency. Lenders use this standard payment to calculate the amount you would pay on other schedules.

In the example above, you'll pay $2,908 once per month for your 5-year term. If your interest stays the same, it will take the full 25 years to pay off your mortgage.

Interest paid for first 5-year term: $117,019
Total interest paid: $372,406

Over the entire mortgage (25 years) $1,454 Semi-monthly (Monthly) 2 2 times per month 24 times per year 1 month Amortization Reduced By $1,773 You Save vs Monthly Payment

Semi-Monthly means you'll divide the monthly payment into 2, and pay that amount twice a month (i.e. the 1st and the 15th).

In the example above, your payment amount is $1,454 twice monthly for your 5-year term. If your interest stays the same, it will take almost 25 years to pay off your mortgage.

Interest paid for first 5-year term: $116,816
Total interest paid: $370,634
Savings compared to monthly: $1,700

Over the entire mortgage (25 years) $1,342 Biweekly (Monthly) 12 26 Every 2 weeks 26 times per year 1 month Amortization Reduced By $1,907 You Save vs Monthly Payment

Biweekly means you're paying 26 payments yearly, once every 2 weeks. For 3 months each year (usually), you'll need to make 3 payments in a month.

In the example above, your payment amount is $1,342 every 2 weeks. If your interest stays the same, it will take a little less than 25 years to pay off your mortgage.

Interest paid for first 5-year term: $116,800
Total interest paid: $370,500
Savings compared to monthly: $1,900

Over the entire mortgage (25 years) $1,454 Accelerated Biweekly (Monthly) 13 26 Every 2 weeks 26 times per year 2.5 Years Amortization Reduced By $60,438 You Save vs Monthly Payment

Biweekly Accelerated means you're paying 26 payments each year, with an extra monthly payment added into the calculation and spread out over the year's payments. For 3 months each year (usually), you'll need to make 3 payments in a month.

In the example above, your payment amount is $1,454 every 2 weeks. If your interest stays the same, it will take only 22.5 years to pay off your mortgage.

Interest paid for first 5-year term: $114,862
Total interest paid: $311,967
Savings compared to monthly: Over $60,400!

Over the entire mortgage (25 years) $671 Weekly (Monthly) 12 52 Every Week 52 times per year 4 months Amortization Reduced By $2,727 You Save vs Monthly Payment

Weekly means you're paying 52 payments each year, which is once a week.

In the example above, your payment amount is $671 every week. If your interest stays the same, it will take less than 25 years to pay off your mortgage.

Interest paid for first 5-year term: $116,706
Total interest paid: $369,679
Savings compared to monthly: $2,700

Over the entire mortgage (25 years) $727 Weekly Accelerated (Monthly) 13 52 Every Week 52 times per year 2.54 Years Amortization Reduced By $61,124 You Save vs Monthly Payment

Weekly Accelerated means you're paying 52 payments each year with an extra monthly payment added into the calculation and spread out over the year's payments.

In the example above, your payment amount is $727 every week. If your interest stays the same, it will take a little less than 22.5 years to pay off your mortgage.

Interest paid for first 5-year term: $114,761
Total interest paid: $311,282
Savings compared to monthly: Over $61,100!

What is a mortgage payment?

A mortgage payment is a blend of interest and principal designed to be paid on a regular schedule to pay off your loan over a period of time (your amortization), usually 25 years.

In the beginning, most of your payment goes towards interest. As the years go by, more goes towards your principal. By the time your 25th year comes around, you're paying mostly principal.

Why does increasing your payment frequency save you interest?

Time is the engine that fires up your mortgage-interest charges. Putting money down sooner and more often reduces your principal faster, incurring less interest.

What does 'accelerated' actually mean?

An accelerated payment means that an extra month has been factored into your payment schedule, to give a slight bump-up in payments that turns into a more significant bump-down in interest costs over time.

Does it cost money to change your payment frequency?

It might. It depends on your lender and mortgage fine print. At THINK Financial, our in-house lender, there's no cost or fee to change your payment schedule. Other lenders may allow changes under certain conditions or for a fee.

Do you have a restricted mortgage?

If you have a restricted mortgage, your options to change your payment may be even more limited or not available at all, or will incur higher costs than you expected. A True North Mortgage broker can help you unearth your mortgage fine print if you have questions.

Which payment type do we recommend?

The one that works best for you, of course. Not everyone can squeeze that extra room out of their budget on a regular basis. Or some clients base their payment schedules on how often they receive a paycheque (i.e. semi-monthly).

Often, when a mortgage payment schedule is bumped up from a monthly one, it takes a few months to adjust to the increase. But once that happens, it can be a great feeling to know that you're on a faster road to a shorter mortgage.

Or, with today's higher rates and prices, you may find that you need the extra budget room and want to bring your payments back down to monthly, and put the cash towards other expenses.

Give our payment calculator a spin below, to see how a payment change could save you a pile of cash.

Or give us a shout. We're standing by to help, in your preferred language, anywhere you are in Canada.

Determine Your Payments

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Start Over

Determine Your Payments

$
$ 21,250
$
Minimum 5%
20%
Custom 5%
%

Payments of

$1,756
Required mortgage insurance
$16,150
Total mortgage required
$419,900
Interest paid over term
$36,384
Principal paid over term
$68,986
Balance at end of term
$350,932
breakdown
Start Over

Determine Your Payments

$
%

Payments of

$1,756
Interest paid over term
$36,384
Principal paid over term
$68,986
Balance at end of term
$350,932
breakdown
Payments
Interest
Principal
Balance
Payments
Interest
Principal
Balance

Various tools and functions of this website perform calculations and provide cost estimates. These tools are designed for illustrative purposes only and make many assumptions that may not reflect all situations. Please use these tools in collaboration with a True North Mortgage agent. True North Mortgage does not guarantee the accuracy, reliability or completeness of these tools or calculations.

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