Simply changing your monthly mortgage payments from to a weekly or bi-weekly payment schedule can actually save you thousands of dollars in interest payments and take years of your mortgage amortization period. Consider timing payments on your pay weeks.
This is how it works. Accelerated weekly and accelerated bi-weekly payment options are calculated by taking a monthly payment schedule and assuming only four weeks in a month. An accelerated weekly payment, for example, is calculated by taking your normal monthly payment and dividing it by four. Since you pay 52 weekly payments, by the end of a year you have paid the equivalent of one extra monthly payment. The accelerated bi-weekly payment is calculated by dividing your monthly payment by two. You then make 26 bi-weekly payments. Just like the accelerated weekly payments you are in effect paying an additional monthly payment per year.
This additional amount accelerates your loan payoff by going directly against your loan's principal. The effect can save you thousands in interest and take years off of your Mortgage.
Steven Porter - Mortgage Advisor, CIBC, steven@stevenporter.ca
