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The different types of mortgage payments.

Most people make their mortgage payments on a monthly basis, but did you know that even slightly increasing the frequency of your mortgage payment could save you thousands of dollars over the lifetime of your mortgage?  Lets look at the different payment frequencies that are available and we’ll see later how they impact the bottom line.

  • A monthly payment means one payment per month
  • A semi-monthly payment means half of your monthly payment paid twice a month
  • A bi-weekly payment means your monthly mortgage payment multiplied by 12 and then divided 26 pay periods in a year
  • An accelerated bi-weekly payment means half your monthly payment paid every 2 weeks
  • A weekly payment means your monthly mortgage payment multiplied by 12 and then divided by 52 weeks in a year
  • An accelerated weekly payment means your monthly mortgage payment divided by 4 and paid every week

Have a look at the table below, where we’ll use an example of a $400,000 mortgage at a 5-year fixed term of 5% with a 25 year amortization (compounded semi-annually, not in advance).  You’ll notice that accelerating your payments can have a HUGE impact on the amount of interest you pay.

Payment FrequencyPayment# Payments Per YearTotal Interest PaidTotal Interest Saved
Monthly$2,326.4212$297,925.98$0.00
Semi-monthly$1,163.2124$296,510.51 $1,415.46
Bi-weekly$1,073.7426$294,090.58$3,835.39
Accelerated bi-weekly$1,163.2126$247,845.42$50,080.54
Weekly$536.8752$293,446.64$4,479.33
Accelerated weekly$581.6152$247,297.56$50,628.40
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