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Mortgage Payment Options

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Mortgage Payment Options

Written by Caitlin Wood

Mortgage Payment Options


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The average Canadian must take on a mortgage in order to purchase a house, once the process is complete and the house is in your name you’ll need to start making payments towards your mortgage. During the mortgage process, you’ll decide, with the help of your lender, which payment option to choose. The option you choose will determine how much and how often you’ll pay. There are 5 different payment options to choose from: monthly, weekly, bi-weekly, accelerated bi-weekly or accelerated weekly.

Each option will affect your budget in a different way, keep reading for all the information you’ll need to choose which mortgage payment option is best for your financial situation.

Learn how to successfully shop for a mortgage, here.

Monthly Payments

Monthly payments are the most straightforward and more often than not the most common. Should you choose monthly payments, your mortgage payment will be taken directly from your bank account on the same name every month. This means you’ll make 12 equal mortgage payments per year.

Weekly Payments

If you choose to make weekly mortgage payments the money will be deducted from your account every week, 52 weeks a year. Weekly payments are calculated by dividing your yearly mortgage payment by 52. If your yearly mortgage payment is $15,000 then your weekly payments will be roughly $288.

Bi-Weekly Payments

Bi-weekly payments mean you’ll make a mortgage payment ever two weeks. Bi-weekly payments are calculated my dividing your yearly mortgage payment by 26. 26 is the number of two week periods in one year. If your yearly mortgage payment is $15,000 then your bi-weekly payments will be roughly $576.

Accelerated Bi-Weekly Payments

Accelerated payments will allow you to pay your mortgage off quicker and therefore save on interest. Accelerated bi-weekly payments seem very similar to just regular bi-weekly payments, but they aren’t. Here’s how accelerated bi-weekly payments work: you’ll be paying half of your monthly mortgage payment every two weeks. Staying with our $15,000 a year mortgage payment, your monthly mortgage payment would be $1250. So you pay $625 every two weeks which ends up being $16,250 instead of $15,000 ($625 x 26= $16,250). By choosing the accelerated bi-weekly payment option you’ll be paying $1,250 more towards your mortgage every year.

Accelerated Weekly Payments

For accelerated weekly payments, the math ends up being roughly the same as for accelerated bi-weekly payments. Your monthly mortgage payment which is $1250, but this time divided by 4 and then multiplied by 52, which means you’ll be paying $16,250 a year for your mortgage. The only difference is that you’ll be making weekly payments instead of bi-weekly payments.

Concerned about making the right choice? Avoid these 5 common mortgage mistakes.

What is the Benefit of Repaying a Mortgage with Accelerated Payments?

While not everyone has the income to commit to accelerated mortgage payments, if it is in fact financially possible for you, then there are several great things that you will benefit from:

  • Shorter amortization. You’ll be able to pay off your mortgage sooner than average.
  • Builds home equity faster. Home equity is the part of your home that you actually own because you’ve paid if off, the quicker you pay off your mortgage the sooner you’ll build equity.
  • Saves on interest. This is probably the number one reason why someone might choose an accelerated payment plan. The quicker you pay off your mortgage the less interest you’ll be charged which means more of your income can go towards paying off the principle.

Mortgage Payment Options: Which is the Best?

The most cost effective option is either accelerated bi-weekly payments or accelerated weekly payments. If you choose one of these options you’ll not only pay off your mortgage sooner but you’ll save several thousand dollars in interest.

But it’s important to keep in mind your cash flow and the kind of life style you want to live while paying off your mortgage. If you feel as though accelerated payments would put too much pressure on your budget then they might not be the best option for you (concerned about how much mortgage you can actually afford? Click here).

Need a Second Opinion?

If you’re looking to purchase a home for you and your family or simply want more information on the mortgage options and solutions available to you, get in contact with us today.

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