Effects of Different Payment Frequencies

Effects of Different Payment Frequencies

There are a number of things to factor in when the time comes to decide how to pay off your real estate mortgage loan. Even though coming up with an effective payment strategy may require a lot of work and adjustments, but in the long run, it will be beneficial for you.


As a matter of fact, experts have concluded that when borrowers really commit to paying off their mortgage, they end up saving thousands of dollars and end up being debt free sooner than they expect it.


Payment frequency is by far the most overlooked tool in the money saving and mortgage payment shed. Most lenders actually lead the borrowers to set up their own payment plans at intervals that suit their needs. There may also be adjustments to the format of the mortgage if you are looking for investment real estate property. Our Red Deer mortgage brokers can give you a variety of options that can fit your best interests.


The most common options for payment plans


  • Monthly
  • Bi-monthly
  • Bi-weekly
  • Bi-weekly accelerated
  • Weekly
  • Weekly accelerated


Choosing one of these options is a simple matter of convenience, however, making weekly payments have certain advantages over monthly ones. Increasing the payment frequency helps you to reduce the principal much faster, you end up paying fewer interests and therefore paying the mortgage sooner rather than later.


Here is a more detailed view of each option to give you a better idea of how much helpful payment frequency really is.


Monthly payments: This is the most common option, it’s normally due the first of every month. The drawback of monthly payments is that payments are done once a month, leaving a lot of time left for interest to accumulate.


Semi-monthly payments: This one is pretty much the same as the first one, instead of making a single payment, you make two payments in the course of a month, typically between the 1st and 15th.


Bi-weekly payments: This one is a bit more complex, but still offers little chance for money saving. The monthly payment its multiply by 12 and then its divided by 26 totaling the amount you’ll have to pay.


Bi-weekly accelerated: This is where things start to change for the better, any borrower seeking to pay off their principal quickly will want to go with this one. The way the payments are scheduled allows you to make at least two extra payments a year.


Weekly payments: This method offers little difference in terms of saving money. The weekly payment is the result of multiplying the monthly payment by 12 and then divided into 52.


Weekly accelerated: Much like the Bi-weekly accelerated this option also allows the borrower to pay off their principal sooner because the schedule has up to four extra payments in at the end each year.


As you can see each option allows for a bit of money saving, but it is important to remember that the more frequent your payments are, the faster you’ll pay your mortgage. If you are just starting out on your journey with mortgages, check out what documents you need to apply for a mortgage to help you get started.

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