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Mortgage Resources - Payment Frequencies
Whether you’re a first-time homebuyer or purchasing a home for the second or third time, the journey to owning a valuable piece of real estate is exciting, and rewarding.
There are so many decisions to be made, and they are decisions that have long-term consequences. Yet there are many experts with specialized advice who are ready to help you make the best choices for you, your family, and your future.
Mortgage Payment Frequencies Explained
When deciding which mortgage payment frequency works best for you, you might want to consider these factors:
-
The total amount of payments you would make over the year.
-
The amount of each payment.
-
The convenience of synchronizing your payments with your cash flow.
-
How much you’ll save in interest over the life of your mortgage.
-
How soon you’ll be mortgage-free.
Use our mortgage payment calculator to see the difference changing your payment frequency makes.
Monthly
The first payment is usually set 1 month from the day your mortgage begins, or you can move your monthly payment date to a more convenient one (like the 1st or the 15th). For example, if you have a revenue property, the payment date can be set a few days after the 1st of the month to allow time for rent cheques to clear your account.
Semi-Monthly
Pay ½ the amount of your regular monthly mortgage payment on the 1st and the 16th of every month. Although it doesn’t decrease the amount of time it takes to pay off your mortgage by much, choose this option for the convenience of synchronizing your payments with your cash flow.
Accelerated Bi-Weekly
Pay ½ the amount of your regular monthly mortgage payment every two weeks (for example, every other Friday). In some months (only twice a year), you make 3 mortgage payments instead of 2.
Because you make 26 payments of ½ the amount of your regular monthly mortgage, it’s as if you’re making an extra monthly payment every year.
You pay your mortgage off faster and save money on the interest.
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Bi-Weekly Regular
Take the total amount of your regular monthly mortgage payments over a year and divide by 26. In some months (only twice a year), you make 3 mortgage payments instead of 2.
Your Bi-Weekly Regular payment amount would be less than your Accelerated Bi-Weekly payment amount.
Choose this option for the convenience of synchronizing your payments with your cash flow.
Accelerated Weekly
Pay ¼ the amount of your regular monthly mortgage payment once a week on the same day (for example every Monday or Friday). In some months (only 4 times a year), you make 5 mortgage payments instead of 4.
Because you make 52 payments of ¼ the amount of your regular monthly mortgage payment, it’s as if you’re making an extra monthly payment every year.
You pay your mortgage off faster and save money on the interest.
Weekly Regular
Take the total amount of your regular monthly mortgage payments over a year and divide by 52. In some months (only 4 times a year), you make 5 mortgage payments instead of 4.
Your Weekly Regular payment amount would be less than your Accelerated Weekly payment amount.
Choose this option for the convenience of synchronizing your payments with your cash flow.
Comparing Payment Frequency Options
For the comparison chart below, let’s say you have a mortgage of $225,000 at a fixed rate of 5% APR* for an original amortization** of 25 years.
In this example, by making accelerated bi-weekly or accelerated weekly payments, you could save over $28,000 in interest, and be mortgage-free 3.5 years sooner.
Monthly
|
Semi-Monthly
|
Accelerated Bi-Weekly
|
Regular Bi-Weekly
|
Accelerated Weekly
|
Regular Weekly
|
|
|---|---|---|---|---|---|---|
| This example is for informational and general illustrative purposes only and may be based on assumptions, dates and projections that may not be correct or applicable. |
||||||
| Payment amount | 1308.06 |
654.30 |
654.30 |
603.31 |
327.15 |
301.51 |
| Payments per Year | 12 |
24 |
26 |
26 |
52 |
52 |
| Mortgage Repaid | 392,701.92 |
392,884.28 |
364,443.21 |
390,875.03 |
364,136.92 |
390,692.38 |
| Mortgage-free in | 25 years |
25 years |
21 ½ years |
25 years |
21 ½ years |
25 years |
| Interest Paid (at same interest rate) | 167,701.92 |
167,321.40 |
139,443.21 |
165,875.03 |
139,136.92 |
165,692.38 |
| Amount of interest you would save | $0 |
$380 |
$28,258 |
$1,826 |
$28,565 |
$2,009 |
We're here to help
If you need help choosing, assessing or applying for an HSBC mortgage you can call us at 1 888 310 HSBC (4722). Alternatively, read our Mortgage FAQs or visit our Mortgages Resources for more information.
*Annual Percentage Rate (APR) calculation assumes no fees will be charged. The rate shown is an example only and is not necessarily applicable to an actual mortgage.
**Assume same interest rate for the entire amortization period.
®MasterCard is a registered trade-mark of MasterCard International Incorporated. Used pursuant to license.
This content is provided for informational purposes only. It is not intended to constitute or replace professional advice and you should not rely on it as such.
