5.2.14 Payment options
- 5.2.1 What is a mortgage?
- 5.2.2 Down payment
- 5.2.3 Pre-approval
- 5.2.4 Home Buyers Plan
- 5.2.5 Amortization and term
- 5.2.6 Types of mortgages
- 5.2.7 Interest rates
- 5.2.8 Payment types
- 5.2.9 Fixed or variable interest rates
- 5.2.10 Video: Mortgage Basics
- 5.2.11 Quiz: Mortgage terminology
- 5.2.12 Case study: Mortgage costs
- 5.2.13 Your mortgage payment
- 5.2.14 Payment options
- 5.2.15 Case study: Financing a mortgage
- 5.2.16 Summary of key messages
Most lenders will let you choose from a variety of payment schedules, such as monthly, biweekly or weekly. If you choose a more frequent schedule, you'll save money, because your money will be applied to the principal sooner, and less interest will accumulate.
If you can afford an "accelerated" schedule, you can make significant savings on your mortgage interest. An accelerated schedule divides your monthly payments over a weekly or biweekly schedule so that you pay an extra monthly payment each year.
The table below shows the main payment schedule options. The example shows payments and the total cost for a mortgage of $100,000 at an interest rate of five percent with an amortization period of 25 years.
| Payment frequency | Description | Payments | Total cost |
|---|---|---|---|
Monthly |
One payment per month for a total of 12 in a year. |
$581.50 |
$174,481.50 |
Semi-monthly (twice a month) |
Two payments per month for a total of 24 in a year.
|
$290.65 twice per month |
$174,390.66 |
Biweekly (every two weeks) |
A payment every two weeks.
|
$268.28 every two weeks |
$174,383.67 |
Accelerated biweekly |
A payment of half the monthly payment every two weeks.
|
$290.80 every two weeks |
$162,394.64 |
Weekly |
One payment per week for a total of 52 in a year.
|
$134.11 every week |
$174,341.73 |
Accelerated weekly |
A payment of one quarter of the monthly payment every week.
|
$145.40 every week |
$162,257.04 |
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