Since a mortgage is likely the largest loan you will ever have, making choices to decrease the cost of borrowing is important. One way to do that is by increasing your mortgage payment frequency. If you select an accelerated weekly or bi-weekly payment option, you are essentially making the equivalent of one additional monthly payment each year which will help pay off your mortgage faster, and over the length of your amortization period thousands of dollars. Here’s a table showing the impact on the interest cost.
Example: $150,000 Fixed-Rate Mortgage at 5.5%
Payment | Amount | Amortization | Amortization Interest Cost |
Monthly | $915.59 | 25 | $124,675.23 |
Semi-monthly | $457.80 | 25 | $124,013.00 |
Bi-weekly | $422.58 | 24.8 | $122,919.67 |
Weekly | $211.29 | 24.8 | $122,620.00 |
Accelerated bi-weekly | $457.80 | 21.2 | $102,289.95 |
Accelerated weekly | $228.90 | 21.2 | $102,044.46 |
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