A privilege that is offered to Mortgagors (borrowers) is the option to choose weekly or bi-weekly mortgage payments so as to pay off the mortgage quickly.
Firstly let’s look at the mathematics of how this happens. Let’s assume your monthly payment is $1,000.00 a month, therefore 12 months X $1,000.00 equals $12,000.00 a year in payments. If you make bi-weekly payments, then you will pay 26 payments X $500.00 equals $13,000.00 a year in payments.
So the bottom line is, if you choose accelerated payments you will pay off the equivalent of one extra monthly payment a year, thus reducing the life of the mortgage by approximately 2.5 years.
There’s a couple of thoughts that need to be looked at here.
1. Do you get paid every week or every two weeks? Or do you get paid on the 15th and the end of the month? Check the calendar. If you get paid on the 15th and 30th you may note that there will be some Fridays where there will be no money in your bank account.
2. If this is your starter home, what is important? Paying off the mortgage in 22.years as opposed to 25 years or having the extra few dollars to have a deck or a patio to enjoy a glass of wine with your spouse on Friday evening, reflecting on the week?
3. If you are a commissioned person or self employed, your cash flow may not be consistent. So therefore meeting a monthly commitment may make more sense than a weekly or bi-weekly payment.
If you choose to stay with monthly payments you can still pay your mortgage off early by using the opportunities offered as pre-payment privileges.
Rates For
Fri, Jan 13, 2012
2:32 pm
| 1 Year (Closed) | |
| CIR: 3.09 | Bank: 4.69 |
| 1 Year (Convertible) | |
| CIR: 3.09 | Bank: 4.69 |
| 1 Year (Open) | |
| CIR: 3.24 | Bank: 5.84 |
| 2 Years | |
| CIR: 3.25 | Bank: 3.39 |
| 3 Years | |
| CIR: 3.40 | Bank: 3.69 |
| 4 Years | |
| CIR: 3.49 | Bank: 3.99 |
| 5 Years | |
| CIR: 3.19 | Bank: 3.75 |
| 7 Years | |
| CIR: 4.90 | Bank: 5.31 |
| 10 Years | |
| CIR: 5.14 | Bank: 5.50 |
