Monthly versus accelerated biweekly mortgage payments

Three schedules, two annual budgets

Monthly means 12 scheduled payments a year. In our model, regular biweekly converts that monthly amount into 26 payments with the same scheduled annual total. Accelerated biweekly instead takes half the monthly payment every two weeks.

The accelerated schedule has two more half-payments than 12 monthly payments. That extra amount reduces principal sooner. FCAC describes it as the equivalent of one additional monthly payment a year.

Regular biweekly and accelerated biweekly are different options. Check the lender's actual payment calculation and dates; the model uses evenly spaced periods and unrounded payments.

A C$300,000 example at 4.50%

For a C$300,000 mortgage amortized over 25 years, using nominal interest compounded semi-annually:

Annual amounts use the model's unrounded payment, so multiplying the displayed rounded amount may differ slightly.

If the rate stayed unchanged through payoff, the accelerated schedule would repay the loan in about 21 years 8 months, with projected interest savings of C$30,046.91 versus monthly payments. These are scenarios, not predictions about future rates or lender rounding.

Compare the extra annual commitment

In this example, accelerated payments commit an extra C$1,660.42 a year. A smaller figure per payment can hide that larger annual total.

Place the payment dates beside your income dates and regular bills. Two payments in most months and an occasional third payment create a different cash-flow pattern from one monthly payment. Test the entire year, rather than comparing only one payment.

You can also use the prepayment calculator to model a regular monthly extra amount. It helps separate the benefit of paying more from the choice of payment frequency.

Check the contract before increasing payments

Lender prepayment privileges limit how much extra you can pay and when. Exceeding the allowance can trigger a penalty. Ask how an accelerated schedule or a payment increase is treated under your particular mortgage.

Our tools do not calculate that penalty or enforce a lender's allowance. They also hold the interest rate constant in lifetime projections. Use the balance at the end of the selected term for renewal planning instead of treating today's lifetime interest total as a guaranteed cost.