Mortgage Payment Options

Mortgage lenders usually offer a variety of mortgage payment options to the consumers, and sometime the mortgage borrowers might be confused by all payment choices. However understanding what the difference between the mortgage payment options might save you thousands of dollars in interest in a long run.

Let's have a look at each of the options above and then you can decide which payment option to choose for your mortgage. The following mortgage payment options are pretty much a standard across the Canadian mortgage industry:

Monthly Mortgage Payment – The monthly payment is the most standard payment, and it simply means that you pay your mortgage once a month on one and the same day of the month. The monthly payment is the most expensive option, because you don't save anything on interest fees.

Semi-Monthly Mortgage Payment – The semi-monthly payment require 2 equal payments (50% of the monthly payment each), which makes 24 payments for the entire year. The semi-monthly payment option, is just marginally better (interest saving wise) compared to the monthly payment.

Bi-Weekly Mortgage Payment – As you have guessed by the name this option requires to make a payment every second week on one and the same day. For example you pay every second Wednesday. The interest saving here are again almost non-existent.

Accelerated Bi-Weekly Mortgage Payment – Now this is an option which deserves your attention. Because you will be paying every second week, you will make a total of 26 payments for the year. As a result of this you are making one more monthly payment per year compared to the previous mortgage payment options. This additional payment will save you lots of money at the end and will allow you to pay off your mortgage faster.

Accelerated Weekly Mortgage Payment – This payment option will result in similar interest rate saving as in the accelerated bi-weekly option (only slightly better). With this payment plan you'll be making 52 payments a year, which again results in additional monthly payment for the year.