Payment Frequency
There are up to six payment frequency options available (depending on the lender) allowing you to match up your mortgage payment to your pay period.
With the accelerated payment option you end up making the equivalent of 1 additional monthly payment towards your mortgage each year. The other option is to go with a non-accelerated option and make a lump sum payment when you have the additional funds.
Monthly Payments:
Semi-Monthly Payments:
Bi-Weekly Regular Payments:
Bi-Weekly Accelerated:
Weekly Payments:
Weekly Accelerated:
- There are four non-accelerated options (Monthly, Semi-Monthly, Bi-Weekly, Weekly) which allow you to coordinate your mortgage payment with your pay period.
- The accelerated options (Bi-Weekly & Weekly) give you the ability to make an extra payment against your principal as part of your regular payment schedule.
With the accelerated payment option you end up making the equivalent of 1 additional monthly payment towards your mortgage each year. The other option is to go with a non-accelerated option and make a lump sum payment when you have the additional funds.
Monthly Payments:
- The most common way of paying a mortgage is with monthly payments typically on the 1st of every month.
Semi-Monthly Payments:
- Semi-monthly payments are debited twice a month, usually on the 1st and the 15th depending on the lender, and each payment is one half of the monthly amount. Therefore, whether you pay $1,000 in monthly payments or $500 in semi-monthly payments, you're still paying $12,000 per year. The savings difference compared to the monthly payment option is nominal (generally within a dollar depending on the mortgage amount) because you are paying the same annual amount just a small fraction more frequently.
Bi-Weekly Regular Payments:
- Bi-weekly payments are debited every 2 weeks and therefore there are 26 bi-weekly payments in a year. Bi-weekly payments are determined by multiplying the monthly payment by 12 and then dividing by 26. So in our $1,000 per month example, the biweekly payment ends up being $461.54 - totaling $12,000 per year. The savings difference compared to the monthly or semi-monthly payment option is nominal (generally within a dollar depending on the mortgage amount) because you are paying the same annual amount just a small fraction more frequently.
Bi-Weekly Accelerated:
- With the accelerated option an EXTRA month’s payment is factored into the scheduled payment therefore the bi-weekly accelerated payment is slightly higher than the bi-weekly regular payment. Bi-weekly accelerated payments are determined by multiplying the monthly payment by 13 (versus 12 for bi-weekly regular) and then dividing by 26. So in our $1,000 per month example, the biweekly accelerated payment ends up being $500 - totaling $13,000 per year. This saves you money because you are paying an extra $1000 over a twelve month period.
Weekly Payments:
- Weekly payments are debited every week and therefore there are 52 weekly payments in a year. Weekly payments are determined by multiplying the monthly payment by 12 and then dividing by 52. So in our $1000 per month example, the weekly payment ends up being $230.77 - totaling $12,000 per year. The savings difference compared to the monthly, semi-monthly payment or bi-weekly regular option is nominal (generally within a dollar depending on the mortgage amount) because you are paying the same annual amount just a small fraction more frequently.
Weekly Accelerated:
- With the accelerated option an EXTRA month’s payment is factored into the scheduled payment therefore the weekly accelerated payment is slightly higher than the weekly regular payment. Weekly accelerated payments are determined by multiplying the monthly payment by 13 (versus 12 for bi-weekly regular) and then dividing by 52. So in our $1,000 per month example, the weekly accelerated payment ends up being $250 - totaling $13,000 per year. This saves you money because you are paying an extra $1000 over a twelve month period.