Making Accelerated Mortgage Payments

December 20, 2017

Accelerated payment options help you pay off your mortgage faster.

Making accelerated payments is the equivalent of making one extra monthly payment each year. This saves you big-time interest over the life of your mortgage (see below).

Accelerated bi-weekly is the most popular option for people wanting to make bigger-than-required payments. It refers to a payment that is half your normal monthly payment, made every two weeks.

Accelerated weekly refers to a payment of one-quarter your the normal monthly payment, made every week.

Example: Suppose you have a $260,000 mortgage, a 4% interest rate and a 25-year amortization. Compare payment options in the table below.

Click to enlarge

If you choose an accelerated payment frequency, you’ll make the equivalent of one extra payment each year. You’ll also pay off your mortgage more than four years quicker, saving you over $21,000 in interest.

Source: FCAC