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City in the Fall

Mortgage Frequency Payments 

Shave Thousands off your Mortgage with the Right Option

Choosing the Right Mortgage Payment Frequency

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When it comes to your mortgage payments, the frequency you choose can make a significant difference in the long run, affecting both the time it takes to pay off your mortgage and the amount of interest you'll ultimately pay.

 

While monthly payments are the standard, there are other options to consider, each with its own advantages.

Here are the six different payment frequencies available:

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  1. Monthly: The most common payment frequency. You make one payment per month for your mortgage. If the interest rate remains unchanged, it will take the full amortization period (typically 25 years) to pay off your mortgage.

  2. Semi-Monthly (Monthly): You divide the monthly payment in two and pay half of it twice a month (usually on the 1st and 15th). This approach can reduce your amortization period by approximately one month compared to monthly payments.

  3. Biweekly (Monthly): You make payments every two weeks, totaling 26 payments in a year. This schedule shaves off some time from your mortgage term, potentially paying it off in around 24 years.

  4. Biweekly Accelerated (Monthly): Similar to regular biweekly payments, but with an extra monthly payment spread throughout the year. This accelerated schedule can significantly reduce your amortization period, possibly paying off your mortgage in just 22.5 years.

  5. Weekly (Monthly): You make payments every week, resulting in 52 payments per year. This payment frequency can reduce your amortization period by several months compared to monthly payments.

  6. Weekly Accelerated (Monthly): This accelerated schedule involves making weekly payments with an additional monthly payment distributed throughout the year. It can potentially pay off your mortgage in less than 22.5 years.

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How Payment Frequency Impacts Your Mortgage:

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  • A more frequent or accelerated payment schedule reduces your principal faster, leading to lower interest costs over time.

  • Accelerated payments include an extra month's payment, which contributes to more substantial interest savings.

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Considerations:

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  • Changing your payment frequency may or may not involve additional costs, depending on your lender and mortgage terms.

  • Restricted mortgages may have limited options for changing payment frequency or may incur higher costs.

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Ultimately, the best payment frequency for you depends on your financial situation and budget. Some people may find it challenging to adjust to more frequent payments initially, while others may prefer aligning their payments with their pay schedule. Given today's higher interest rates and housing prices, you might even choose to switch back to monthly payments to allocate extra funds elsewhere in your budget.

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MortgagePal can provide guidance on selecting the payment frequency that suits your needs best, taking into account your unique financial circumstances and mortgage terms.

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