What are accelerated mortgage payments?

Changing your mortgage payment frequency can help you pay off your mortgage faster.

By Homicity

Jul 24, 2018

What are accelerated mortgage payments?

Two words: mortgage freedom.

Those are the words that most Canadians want to hear. Mortgage payments are a burden for some. They are repaid in an amortization period of 25-30 years with monthly payments. But what is there was a way to pay off your mortgage faster?

Accelerated payments are the answer. We are not talking about extreme measures. No need to live in your basement and rent out your house to burn your mortgage. A simple solution is to change your mortgage payment frequency.

The bad news? You will pay more each year. The good news? Changing your mortgage payment frequency payments can save you on interest costs and shorten your amortization period.

Let’s see some real numbers. You buy a house for $375,000 with a 2.59% interest rate, a down payment of 20% and an amortization period of 25 years. Your monthly mortgage payment would be $848.36. We will only look at the two scenarios that would save you the big bucks.


Accelerated bi-weekly payments

With this payment plan, your mortgage payment frequency will be every two weeks for a total of 26 payments per year.

By the end of the amortization period, you will make 482 bi-weekly payments of $782.78 and one final payment of $326.94. Saving you $15, 518.27 in interest costs. Let me repeat that. You will save $15, 518.27.


Accelerated weekly payments

This option is for the brave. You will pay every week for a total of 52 payments a year. In 25 years you will make 870 accelerated weekly payments of $424.18 and one final payment of $375.81. And what are your savings? $15,683.48in interest costs.


Saving money sounds nice. Right? But accelerated payments are not for everyone, and commitment is necessary. You can’t change your mind once you switch over. The mortgage payment frequency will be the same for the duration of your mortgage term.

Your budget will always have the final say. Work out your budget, consider other costs, and think about other investments you want to make. If your budget can’t take the accelerate payment, look at other options. Don’t be pressured to be mortgage-free if it means you can barely pay other bills.

If you are confident you can make it, the next step is to talk to your lender. Don’t prepay any amount of mortgage without their permission. Prepayment penalties will not save you money. Your lender must approve your mortgage payment frequency.



Homicity helps you find your dream home in the perfect community. Whether you are buying, renting, or selling, you can navigate the Canadian real estate market with confidence with our expert advice, market news, and recommendations powered by AI.

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