What is the difference between making a monthly mortgage payment and making bi-weekly accelerated payments? Which payment schedule is more advantageous?

Maybe you've recently been approved for a mortgage loan or are considering changing your current mortgage payment frequency. I can help you understand the differences between monthly and bi-weekly accelerated payments.

Monthly payments are as straightforward as they sound - every month, you make one payment, which is a fraction of the principal amount owed, plus the interest component. This is a steady approach to paying off your mortgage, and spreading the cost of the mortgage evenly over the year.

Bi-weekly accelerated payments, however, divide the monthly payment in half and require this amount to be paid every two weeks. Since there are 52 weeks in a year, this results in 26 payment, or the equivalent of 13 full monthly payments, each year. This method ends up amounting to one extra mortgage payment annually, which has the effect of paying down your mortgage principal more quickly, thus reducing the amount of interest paid over the life of the mortgage.

Now, whether you choose monthly payments or bi-weekly, accelerated payments all depends on your comfort level and financial situation. You must consider the opportunity cost of the additional payments under a bi-weekly accelerated plan. If these funds could be invested at a higher rate, for example, you may choose to opt for monthly payments and invest the difference.

However, if you're rate is high, or if investment opportunities are not available, a bi-weekly, accelerated payment may be more advantageous.

You can change your payment frequency as needed. If the current frequency is not benefiting you, feel free to make a change without any issues. You must make sure to determine whether various payment frequencies are available when choosing a mortgage lender.

If you have any questions, I would be more than happy to help you.


Sarah Colucci, Mortgage Agent
Sherwood Mortgage Group, Broker 12176
Direct: (647) 773-4849
www.coluccimortgages.com


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