Back to Blog

by Chris O' Sullivan - cosullivan@mortgagwriters.ca

The answer to this question depends on one two things: One’s current financial situation and do you want to save on paying the interest part of the mortgage.

I will go over the different payment options available and provide a chart on how much a mortgage will cost you depending on the payment option you decide on.

The Monthly Mortgage Payment:

This is the most standard payment. You pay your mortgage once a month. This is the most expensive option, since you don’t save anything on interest fees. You will have 12 payments for the entire year.

Semi-Monthly Mortgage Payment:

This option requires two equal payments ( 50% on the monthly payment), which makes 24 payments for the entire year. This is a better option than the monthly payment. It will save you more on the interest payments.

Bi-Weekly Mortgage Payment:

This option requires the borrower to make mortgage payments every two weeks on the same day. You will pay a total of 26 payments for the year.  You make half the monthly payment every two weeks. So you will make 13 full payments for the entire year. This will save you a bit more on the interest then the semi-monthly option.

Accelerated Weekly Mortgage Payment:

This will give you slightly better interest rate savings then the accelerated bi-weekly payment option. You will make 52 payments per year. This results in an additional monthly payment for the year.

This chart will assume a mortgage of $200,000, for a 5 year fixed term at 3.39%, with amortization of 25 years.  Below are the different payment options and the savings associated with each from a monthly payment option.

 

Total Payments

Total Interest Paid

Time To Payoff Mortgage

Savings 

Monthly Mortgage Payment

$296,088

$96,088

300 months

(25 yrs.)

N/A

Semi-Monthly Mortgage Payment

$295,765

$95,765

300 Months (25 yrs.)

$323.00

Bi-Weekly Mortgage Payment

$283,606.59

$83,606.59

266 months

(22 yrs. and 2 months)   

$12,483.21

Weekly Mortgage Payment

$283,470.10

$83,470.10

266 months

(22yrs. And 2 months)

$12,619.71

 

This chart will assume a mortgage of $450,000, for a 5 year fixed term at 3.39%, with amortization of 25 years.  Below are the different payment options and the savings associated with each from a monthly payment option.

 

Total Payments

Total Interest Paid

Time To Payoff Mortgage

Savings 

Monthly Mortgage Payment

$666,200.36

$216,200.36

300 months

(25 yrs.)

N/A

Semi-Monthly Mortgage Payment

$665,471.25

$215,471.25

300 Months (25 yrs.)

$729.10

Bi-Weekly Mortgage Payment

$638,114.83

$188,114.83

266 months

(22 yrs. and 2 months)   

$28,065.52

Weekly Mortgage Payment

$637,804.92

$187,804.92

266 months

(22yrs. And 2 months)

$28,395.44

 

If you can, it is well worth to use a bi-weekly or weekly payment structure to pay down your mortgage.
Chris O'Sullivan
 
Chris O'Sullivan is a mortgage agent for The Mortgage Writers and can be reached at cosullivan@mortgagewriters.ca
 
 
 
  

Comments

No comments

Post Your Comment:

Categories
Data supplied by CREB®’s MLS ® System. CREB® is the owner of the copyright in its MLS® System. The Listing data is deemed reliable but is not guaranteed accurate by CREB®.
The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.
The trademarks REALTOR®, REALTORS®, and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used under license.