Mortgage Basics

Choosing the Right Mortgage Payment Frequency: Monthly, Weekly, or Biweekly

Choosing the Right Mortgage Payment Frequency: Monthly, Weekly, or Biweekly
Written by
  • Ashley Howard
| 22 February 2024
Reviewed, 22 February 2024
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    Choosing a payment schedule for your mortgage is a crucial aspect of budgeting as a homeowner. When deciding how frequently to make payments, it’s important to look for options that help you pay off your mortgage as quickly as possible to increase your home’s equity while keeping the payments manageable and affordable.

    When arranging your mortgage, many lenders offer a variety of mortgage payment frequencies to select from. This post explains the impact of each option on your mortgage payments, the amortization, and the overall interest paid throughout the life of the mortgage.

    Key Takeaways

    • The frequency at which you decide to make mortgage payments is known as the mortgage payment frequency.
    • Your choice of mortgage payment frequency can affect the total amount of interest you will pay throughout the life of the mortgage.
    • Opting for accelerated payment frequencies can significantly decrease the lifespan of your mortgage and the total interest.

    Understanding Mortgage Payment Frequencies

    The frequency of your mortgage payments determines how often you will make payments towards your mortgage. Payment frequencies can have an impact on the total interest you pay over the life of the loan as well as the amortization

    Mortgage payment frequencies include monthly, semi-monthly, biweekly, weekly, accelerated biweekly, and accelerated weekly. The standard option is to make monthly payments, where you pay once every month towards your mortgage. However, many lenders provide alternative options to help you arrange your mortgage payments in a way that matches your payment preferences.

    Options for Mortgage Payment Frequency

    The choice of frequency can significantly affect the total interest paid and the amortization of your mortgage. Increasing the frequency of payments can reduce interest-carrying costs and help you pay off your mortgage faster.

    Monthly is the most frequently selected payment option and is the foundation for determining other payment schedules. Under this frequency, you would make 1 monthly mortgage payment, totalling 12 payments over a year.

    Semi-monthly refers to splitting the monthly payments into two and making the payment twice a month for a total of 24 payments in a year. Under this frequency, you have the flexibility to select any two days in a month to make payments as long as they are at least 15 days apart within a 28-day monthly cycle.

    Biweekly entails paying your mortgage every two weeks, resulting in 26 payments per year. This payment frequency will require you to make 3 mortgage payments instead of 2 in certain months.

    Weekly entails making a payment every week, adding up to 52 payments in a year.

    Accelerated biweekly refers to a payment frequency of making payments every 2 weeks, resulting in 26 payments per year. This is similar to a regular bi-weekly schedule. However, with an accelerated plan, you will also make an extra monthly mortgage payment distributed throughout the year. 

    Accelerated weekly refers to making a payment every week for 52 payments in a year, just like with regular weekly payments. However, with an accelerated payment plan, the amount paid equals an extra monthly mortgage payment distributed throughout the year.

    Some lenders may only provide an accelerated choice for biweekly and weekly repayments. In contrast, others may only have monthly payment options for specific products, like variable mortgages. Moreover, some lenders will compound interest at the same frequency as your payment schedule for their variable mortgage, resulting in a higher cost.

    Comparing Options for Mortgage Payment Frequencies

    The chart below showcases the various mortgage payment frequencies and their effects on reducing the overall amortization and interest paid for a $400,000 mortgage with a 25-year amortization and a 5.14% interest rate. This allows for a better understanding of how different payment options can impact mortgage savings throughout the mortgage process.

    Mortgage Payment Frequency Mortgage Payment Amount Interest Paid (5-Year Term) Total Interest Paid (25-Year Amortization)  Amortization Savings (vs Monthly) Interest Savings (vs Monthly)
    Monthly $2,359 $96,299 $307,215 0 years $0
    Semi-Monthly $1,179 $96,137 $306,010 Approx. 1 month $1,205
    Biweekly $1,088 $96,124 $305,895 Approx. 1 month $1,320
    Weekly $544 $96,046 $305,202 Approx. 1 month $2,013
    Accelerated Biweekly $1,179 $94,506 $256,667 Approx. 3 years, 6 months  $50,548
    Accelerated Weekly $589 $94,421 $256,083 Approx. 3 years, 6 months $51,132

    Advantages and Disadvantages of Making Weekly Mortgage Payments

    Pros

    • Accelerate mortgage repayment: Opting for weekly payments enables you to make more frequent payments, resulting in a quicker repayment of the principal amount.
    • Reduce interest costs: Frequent payments help lower the total interest paid throughout the mortgage’s lifespan.
    • Sync with pay schedule: For those on a weekly pay schedule, aligning mortgage payments with payday can simplify budgeting.

    Cons

    • Possible budget limitations: Frequent withdrawals for weekly payments may affect your budgeting and cash flow, particularly if your pay schedule does not match your mortgage payments.

    Advantages and Disadvantages of Biweekly Mortgage Payments

    Pros

    • Accelerate your mortgage payoff: Utilizing biweekly payments enables you to make more frequent payments, reducing the principal amount faster.
    • Save on interest: By making payments more frequently, you can decrease the overall amount of interest you will pay.
    • Synch with pay schedule: Biweekly pay schedules are common, making this option a convenient way to align your mortgage payments and simplify budgeting and financial management.

    Cons

    • Additional payments: Occasionally, there will be 3 payment dates in a month on a biweekly schedule, which may pose difficulties in budgeting if your pay schedule does not match up.
    • Possible financial limitations: Biweekly payments require more frequent withdrawals, potentially affecting cash flow.

    Advantages and Disadvantages of Making Monthly Mortgage Payments

    Pros

    • Simplified budgeting: By making only one monthly withdrawal, monthly payments make it simpler to budget for this cost as you can coordinate it with other monthly expenses.
    • Easier cash flow management: Monthly payments involve fewer transactions than other payment frequencies, simplifying cash flow management.

    Cons

    • Higher payment amount: Monthly payments involve a larger withdrawal, potentially affecting cash flow for other financial obligations or savings if not carefully planned.
    • Possible financial limitations: Monthly mortgage payments may not align with your payday, posing challenges in effectively managing your finances.
    • Extended mortgage repayment period: Compared to more frequent payment options, monthly payments require the entire amortization period for complete repayment.
    • Increased interest costs: Due to the longer amortization period, monthly payments will result in higher interest expenses throughout the mortgage.

    Accelerated Mortgage Payment Frequencies

    Opting for accelerated mortgage frequencies can yield significant advantages, such as reducing interest costs and shortening the amortization period. This approach entails an additional monthly payment distributed evenly throughout the year, enabling you to expedite the repayment of your mortgage principal.

    To significantly reduce the length of your mortgage and save a substantial amount in interest, consider opting for an accelerated repayment. Keep in mind that not all lenders may provide this option, so it’s important to confirm with your lender.

    Frequently Asked Questions

    What is an accelerated payment?

    Accelerated payments involve an extra monthly payment toward your mortgage spread across all payments during the year. Accelerated options are typically biweekly or weekly and help you pay off your mortgage faster than other payment frequencies.

    What mortgage payment frequency should I choose?

    Consider your payroll schedule, budget, and financial goals when assessing which payment frequency to choose. It may be easier to select a frequency that aligns with your payday, or if you carry a savings buffer, consider aligning the payments to match other bill payments you make each month. If your goal is to pay down your mortgage faster, then an accelerated frequency may be the best option.

    Which payment frequency allows me to pay my mortgage faster and save the most interest?

    Accelerated weekly payments will save you the most time and money on your mortgage. An accelerated weekly payment can help you reduce your amortization by approximately 3 years and save you considerably more in interest than other payment frequencies.

    Final Thoughts

    Deciding on a payment frequency is a crucial choice that can significantly affect the speed of paying off your mortgage and the amount of interest you will pay. Consider your payroll schedule, budgeting preferences, and short- and long-term financial objectives when making this decision. Remember that opting for a more frequent payment schedule will result in a quicker reduction of your mortgage and a decrease in interest expenses.

    Seek professional advice when creating your mortgage payment plan to ensure it aligns with your savings and budgeting strategy. Reach out to a knowledgeable mortgage expert today who can offer personalized guidance for your mortgage.