Accelerating Mortgage Payments: Monthly vs Weekly Options

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Mortgage payment frequency is an often underestimated lever for reducing total loan cost and shortening the amortization period. In Canada, lenders generally offer several frequency options: monthly (12 payments per year), semi-monthly (24 payments per year), bi-weekly (26 payments per year), weekly (52 payments per year), accelerated bi-weekly (26 payments per year), and accelerated weekly (52 payments per year). The crucial distinction lies between regular and accelerated frequencies. Regular bi-weekly payments simply divide the monthly payment by two, with no real savings. In contrast, accelerated bi-weekly payments calculate half the monthly payment and apply it 26 times per year, which is equivalent to 13 monthly payments instead of 12. This extra payment is applied directly to principal. On a $400,000 mortgage at 5% over 25 years, switching from monthly to accelerated bi-weekly payments can reduce amortization by approximately 3 to 4 years and save tens of thousands of dollars in interest. The same principle applies to accelerated weekly payments. In Quebec, an AMF-certified mortgage broker can calculate the exact impact for your situation and verify the options offered by your lender.

Accelerating Mortgage Payments to Save Thousands of Dollars

Choosing a mortgage payment frequency is one of the simplest and most effective decisions a borrower can make to reduce the total cost of their loan. Yet many homeowners in Canada keep the default monthly payment without realizing that a simple frequency change can save them tens of thousands of dollars and shorten their amortization by several years, without any modification to the interest rate or mortgage contract.

The Six Payment Frequencies in Canada

Monthly: 12 payments per year. This is the default frequency. The full monthly payment is made once per month.
Semi-monthly: 24 payments per year. The monthly payment is divided by 2 and paid on the 1st and 15th of each month. No savings compared to monthly, as the annual total is identical.
Bi-weekly: 26 payments per year. The annual payment (monthly x 12) is divided by 26. The annual total is the same as monthly. No significant savings.
Accelerated bi-weekly: 26 payments per year. The monthly payment is divided by 2. Result: the equivalent of 13 monthly payments per year instead of 12. The extra payment goes directly to principal.
Weekly: 52 payments per year. The annual payment (monthly x 12) is divided by 52. The annual total is the same as monthly. No significant savings.
Accelerated weekly: 52 payments per year. The monthly payment is divided by 4. Result: the equivalent of 13 monthly payments per year. Same principle as accelerated bi-weekly.

Concrete Impact on a $400,000 Mortgage

Consider a concrete example: a $400,000 mortgage at a 5% fixed rate with a 25-year amortization. The monthly payment would be approximately $2,326. With accelerated bi-weekly payments ($1,163 every two weeks), you make the equivalent of one additional monthly payment per year (approximately $2,326 more per year applied to principal). Over the life of the loan, this strategy reduces amortization by approximately 3 years and 6 months and saves approximately $50,000 in interest. The higher the interest rate, the greater the absolute savings.

Choosing the Right Frequency for Your Situation

The ideal frequency depends on your pay cycle. If you are paid bi-weekly, accelerated bi-weekly payments naturally align with your cash inflows. If you are paid weekly, accelerated weekly payments may be more comfortable for budget management. The important thing is to consider selecting an accelerated frequency that harmonizes with your income to avoid bank overdrafts and returned payment charges. In Quebec, your AMF-certified mortgage broker can model the different options and show you the exact impact of each frequency on your specific loan.

Frequently Asked Questions

What is the difference between bi-weekly and accelerated bi-weekly payments?

Regular bi-weekly takes the monthly payment, multiplies it by 12, and divides by 26. The annual total is identical to monthly payments. Accelerated bi-weekly takes the monthly payment, divides it by 2, and multiplies by 26. This produces the equivalent of 13 monthly payments per year instead of 12. It is this extra payment that creates the interest savings.

How much can I save by switching to accelerated payments?

On a $400,000 mortgage at 5% amortized over 25 years, switching to accelerated bi-weekly payments saves approximately $45,000 to $55,000 in interest over the life of the loan and reduces amortization by 3 to 4 years. The exact amount depends on your rate, balance, and remaining amortization.

Do all lenders offer every payment frequency?

Most major Canadian lenders offer all frequencies, but some alternative or monoline lenders may limit the options. Verify available frequencies before signing your mortgage contract. Your mortgage broker can confirm which options each lender offers.

Can I change my payment frequency during the term?

Most lenders allow payment frequency changes at no cost during the term. Some require 30 days' notice or mandate that the change take effect on a specific date. Contact your lender or broker to learn the conditions applicable to your contract.

Is accelerated weekly even more advantageous than accelerated bi-weekly?

The difference between accelerated weekly and accelerated bi-weekly is minimal, amounting to a few hundred dollars over the total life of the loan. The main advantage is that you pay slightly earlier in the month, which marginally reduces accrued interest. The most important thing is to consider selecting an accelerated frequency, regardless of which one.