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What are the mortgage payment options in Canada?

During buying a property, you will need to decide on the type of mortgage payments you wish to make. This decision is most likely to be determined predominantly by your personal financial lifestyle—factors such as when you’re paid, and your personal cash flows will be considered.

How much you pay overall and how often you pay it will be dependent on which mortgage payment option you choose. There are a few different options:

  • Monthly
  • Bi-Weekly
  • Accelerated Bi-Weekly
  • Weekly
  • Accelerated Weekly

The most popular options are monthly, bi-weekly and accelerated bi-weekly. However, don’t let that put you off exploring any other options available to you.

Monthly Payments

A monthly payment option is the most simple and straightforward option available. You will pay an amount from your bank account on a set day each month, and you may make 12 payments per year. As simple as that.

This is the most popular mortgage option and traditionally what most people will go for, especially if paid monthly.

Bi-Weekly Payments

A Bi-Weekly mortgage allows you to pay every 2-weeks throughout the year, and this works out as 26 payments in a year. To calculate this, you just take your usual monthly payment rate, multiply it by 12, and divide by 26. People who are paid on a bi-weekly basis are most likely to be interested in this payment option.

Accelerated Bi-Weekly Payments

Similar to the standard Bi-Weekly, but the calculation is a little different. You take your usual monthly payment and divide it by two, and then payment will be taken from your bank account every two weeks.

The payment works out as slightly higher than a standard bi-weekly payment setup, and therefore you pay off your mortgage slightly quicker.

Weekly Mortgage Payments

Multiply your monthly payment by 12 and then divide by the 52 weeks in the year, and you will reach your weekly mortgage payment rate. Due to this, with a weekly mortgage, you will make 52 payments within each year. This may also help individuals who struggle to keep track of their personal finances on a month-to-month basis and worry they may not be able to pay their mortgage if waiting until the end of the month.

Accelerated Weekly Payments

You divide your monthly payments by four and make 52 payments in the year. This works out to be slightly higher than your standard weekly mortgage payments, and therefore you pay off the mortgage quicker.

This might be more suitable for paid individuals on a week-by-week basis instead of a monthly salary.

Accelerated Vs. Regular Payments

The difference between these two types of payments purely revolves around how they are calculated.

An accelerated payment basis will cost slightly more than a regular payment, but you will save a large amount of money in the long term in saved interest due to the fact you’ll pay off the mortgage quicker.

Come to discuss that topic in our Facebook Group!

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