Types of Mortgage Payments
Did you know that there are different types of mortgage payments available to you? Depending on your goals - paying off the mortgage faster, having an affordable payment, breaking the payment up over multiple pay periods - you may want a different option than the standard monthly payment. Discussing these goals with your mortgage broker can help you choose the right monthly payment.
Payment options can include:
- Accelerated Bi-Weekly
A monthly payment is the one of the more common options. Your mortgage payment will come out of your bank account on the same day each month for a total of 12 payments each year.
Bi-weekly payments are made every two weeks for a total of 26 payments per year.
The accelerated bi-weekly payment is calculated by taking a monthly payment and assuming there are only four weeks in a month (so 48 weeks in a year). The normal monthly payment is divided by two and you end up making 26 payments. Since you are actually making payments over 52 weeks, not the 48 weeks that the calculation assumes, you pay the equivalent of an extra month each year. This can take years off your mortgage and save you thousands of dollars.
Payments are made every week for a total of 52 payments.
Do you want to see what difference these payment options could make to you? Download our app and check out the purchase calculator. Enter your information and click on the payment section to compare options.