Why Choose Accelerated Weekly Payments for Your Mortgage?

The question of mortgage payment frequency often arises. To be well-prepared, it's essential to understand the differences between the available options. Many mortgage brokers will advise you to opt for accelerated weekly payments. Here's why.

 

There is a significant difference between accelerated weekly payments and regular weekly payments. Accelerated weekly payments are calculated by dividing the monthly payment by 4. In contrast, regular weekly payments are obtained by multiplying the monthly payment by 12, then dividing by 52.

 

Let's take the example of a monthly payment of $2332.36 on a mortgage of $400,000 at an average rate of 5%, amortized over 25 years.

By choosing accelerated weekly payments, you will pay $44.97 more per week. However, you will repay an additional monthly payment each year.

Regular weekly payments, although rarely offered, do not allow for significant savings compared to monthly payments (approximately $1100 over 25 years at most). In contrast, with accelerated payments, you will save more than $58,459 over the same period!

 

Is the question simpler now? Would you prefer to pay $45 more per week to save nearly $58,500 after 25 years?

 

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