What is an Accelerated Mortgage Payment?
If you’re looking for a way to pay off your mortgage faster and save money on interest, an accelerated mortgage payment strategy might be just what you need. It’s all about making slightly higher or more frequent payments to reduce your mortgage term and overall interest costs. Here’s how it works:
Types of Accelerated Payments
- Accelerated Bi-Weekly Payments
• Instead of making a full monthly payment, you pay half of your monthly payment every two weeks.
• Since there are 52 weeks in a year, this results in 26 payments (which is the equivalent of 13 full monthly payments rather than 12).
• Example:- Monthly payment: $2,000
- Bi-weekly payment: $1,000 (26 payments = $26,000/year vs. $24,000/year for monthly payments).
- Accelerated Weekly Payments
• You pay a quarter of your monthly payment each week.
• This also adds up to 13 full monthly payments annually, just like the bi-weekly option.
Benefits of Accelerated Payments
- Pay Off Your Mortgage Faster
• Since you’re making an extra month’s worth of payments each year, your mortgage is paid off quicker than with standard payments. - Save on Interest
• By paying down your mortgage faster, you reduce the overall interest charged over the life of the loan. - Budget-Friendly
• Smaller, more frequent payments can fit better with your pay schedule (e.g., if you’re paid bi-weekly or weekly), helping you stay on track without feeling the financial pinch.
Is an Accelerated Payment Right for You?
- Affordability: It’s important to make sure you can handle slightly higher annual payments without stretching your budget too thin.
• Financial Goals: This strategy works best if your goal is to pay off your mortgage faster and save on interest.
• Flexibility: Many lenders allow you to switch between regular and accelerated payments, so if your financial situation changes, you can adapt.
How I Can Help
As an experienced mortgage broker with over 23 years of experience, I can help you understand the impact of accelerated payments on your mortgage and budget. I’ll work with you to compare options from different lenders to find payment structures that suit your needs. With my local expertise in Hamilton, Ancaster, and across Ontario, I’m here to guide you toward strategies that can save you money and help you reach your financial goals faster.
Ready to Explore Accelerated Payments?
If you’re considering accelerated payments or want to learn more about how they can benefit your mortgage, get in touch with me today. I’ll help you find the right approach for your situation.
Call me at: 905-929-1199
Email me at: lamalfi@tmacc.com