1. Payment Frequency Options Explained
| Frequency | Payments per Year | Total Annual Paid | Effect vs. Monthly |
|---|---|---|---|
| Monthly | 12 | 12 × M | Baseline |
| Accelerated Bi‑Weekly | 26 | 26 × (M ÷ 2) = 13 × M | 1 extra monthly payment per year → faster payoff |
| Accelerated Weekly | 52 | 52 × (M ÷ 4) = 13 × M | Same extra year’s payment, even more frequent interest reduction |
- M = your standard monthly payment
- With Monthly, you pay exactly 12 M per year.
- With Accelerated Bi‑Weekly, you split M in half and pay M/2 every two weeks → you end up making 13 full M payments each year.
- With Accelerated Weekly, you split M into four and pay M/4 each week → 52 × (M/4) also equals 13 × M per year.
Both accelerated options give you an extra monthly payment annually—automatically applied to principal—which chips away years and interest.
2. The Numbers at a Glance
Example Mortgage
- Amount: $300,000
- Rate: 3.50% APR
- Amortization: 25 years
| Frequency | Approx. Term | Total Interest Paid* | Years Saved | Interest Saved* |
|---|---|---|---|---|
| Monthly | 25.0 years | $150,560 | – | – |
| Accelerated Bi‑Weekly | ~22.7 years | $130,000 | 2.3 years | ~$20,560 |
| Accelerated Weekly | ~22.3 years | $126,000 | 2.7 years | ~$24,560 |
* approximate figures based on typical amortization schedules.
Key takeaway: by accelerating just one extra payment per year…
- You can shave 2–3 years off a 25 year term
- You can save $20,000–$25,000 in interest over the life of your mortgage
3. Why More Frequent Payments Save You Money
- Faster Principal Reduction
Every accelerated payment applies directly to principal, reducing the balance faster than waiting for the month‑end. - Less Interest Accrual
Lenders calculate interest daily or weekly. The sooner you lower your principal, the less interest tacks on at each compounding interval. - Built‑In Forced Savings
Accelerated schedules automate an extra annual payment—you don’t need to remember to make lumpsum top‑ups.
4. Choosing the Right Option
- Budget Predictability:
- Monthly payments are easiest to budget if your income is once‑monthly.
- Bi‑weekly or weekly can align better if you’re paid every two weeks or weekly.
- Cash‑Flow Considerations:
- Weekly payments are smaller but more frequent; ideal if you struggle with large monthly outflows.
- Bi‑weekly hits your account every other week, syncing nicely with bi‑weekly payroll cycles.
- Maximizing Savings:
- Accelerated Bi‑Weekly is the most common “sweet spot” for easy setup and significant savings.
- Accelerated Weekly edges out bi‑weekly by reducing interest even sooner, but the difference is marginal beyond the 13th payment.
5. How to Switch Your Payment Frequency
- Check with Your Lender or Broker
Ask whether they offer “accelerated bi‑weekly” or “accelerated weekly” options—and confirm there are no setup fees. - Set Up Pre‑Authorized Debits
Many lenders allow you to automate the new schedule via online banking or through your mortgage broker. - Verify Your First Few Payments
Ensure amounts and dates line up exactly as requested—catching any hiccups early prevents extra interest. - Monitor Your Amortization Schedule
Most lenders will provide an updated payoff date; compare it with your original schedule to see your savings in action.
6. Is It Right for You?
- Yes, if you want to:
- Pay off faster without changing your interest rate
- Save tens of thousands in interest over the life of your mortgage
- Force extra principal payments without thinking about it
- Maybe not, if:
- You need the budget flexibility of staying on a standard monthly plan
- You plan to refinance or sell in the short term (savings accrue over years)
7. Next Steps
- Talk to your Lethbridge Mortgage broker today about switching to an accelerated payment plan.
- Run a quick amortization comparison to see exactly how many years and dollars you’ll save based on your own balance and rate.
- Even a small change in payment rhythm can have a big impact—why pay more interest than you have to?
Bottom line: by moving from a standard monthly schedule to an accelerated bi‑weekly or weekly plan, you’re effectively making an extra monthly payment each year—speeding up your payoff and locking in significant interest savings with no additional rate risk.
Ready to save?
Contact us at Lethbridge Mortgage to set up your accelerated payment plan and watch your mortgage balance shrink faster than ever.
