Home buyers that opt for accelerated payments will end up paying the equivalent of an additional payment each year. The benefit is that it will help you pay off your mortgage sooner and save money on interest. 

How to calculate the accelerated payment

Accelerated bi-weekly 

This frequency is  a total of 26 times per year, paid every two weeks on the same day of the week. To figure out your accelerated bi-weekly payment amount, take the monthly payment and divided it by 2.

For example, if the monthly payment is $1,500/month, the calculation would look like this: $1,500 ÷ 2 = $750

The standard bi-weekly payment would have been calculated like this:
$1,500 (per month) x 12 (months per year) ÷ 26 (# of 2-week periods in 1 year) = $692

The difference is $58 every two weeks, or about $4/day, in this example.

Accelerated weekly

Mortgage payments that come out every week but are higher than regular weekly payments. There are 52 payments per year with this frequency option. To figure out your accelerated weekly payment amount, take the monthly payment and divide it by 4.

For example, if the monthly payment is $1,500/month, the calculation would look like this: $1,500 ÷ 4 = $375

The standard bi-weekly payment would have been calculated like this:
$1,500 (per month) x 12 (months per year) ÷ 52 (# of 1-week periods in 1 year) = $346

The difference is $29 every week, or about $4/day, in this example.

Impact of paying accelerated payments

A $1,513/month mortgage payment works out to about a $320,000 mortgage amortized over 25 years, at an interest rate of 2.99%.

The standard bi-weekly payment would be $698. The accelerated bi-weekly payment would be $756, or about $4/day, just like the examples above.

By paying that extra $4/day (about $4.15 actually) you make a whole extra monthly payment - around $1,500 - every year.

The impact? HUGE. With standard payments, you would pay about $133,521 in interest expenses and it would take you 25 years to pay off the mortgage. With accelerated payments, you pay $117,404 in interest - a difference of $16,117, and you would have your mortgage paid off almost 2 full years sooner.

For about the cost of a cup of coffee a day, you could be mortgage free years sooner and save thousands in interest.

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