Total Payment Mortgage Calculator: Understanding Accelerated Bi-Weekly and Weekly Payments in Canada

As a homeowner in Canada, managing your mortgage payments is crucial to avoid any penalties or complications. One of the most effective ways to reduce your mortgage debt is by increasing your payment frequency, which can be done through accelerated bi-weekly or weekly payments. In this article, we will explore how these options work and what you need to know before making a change.

Understanding Accelerated Payments

Accelerated bi-weekly and weekly payments are two common ways to pay off your mortgage faster in Canada. With an accelerated payment schedule, you make more frequent payments than the standard monthly payment. For example, if your regular mortgage payment is $1,500 per month, you could split it into 26 bi-weekly payments of $575 each or 52 weekly payments of $287.50 each.

Increasing Your Mortgage Payment

When making an accelerated payment, keep in mind that increasing your mortgage payment will permanently affect your future payments. It may not be possible to decrease the amount once set. Some lenders might only allow you to increase your regular mortgage payment amount, rather than offering flexibility with extra payments.

For instance, if you double up your RBC mortgage payment from $1,500 to $3,000, you are not required to make a $3,000 mortgage payment the next month. However, going over this limit will cause penalties to apply.

Making Extra Payments

You can make one-time prepayments using your annual 10% prepayment allowance or by doubling up your regular mortgage payment. With RBC, for example, you can make extra payments equal to 10% of your original mortgage principal amount every year. Not all lenders offer this flexibility, so it's essential to check with your lender before making any changes.

* Accelerated bi-weekly and weekly payments are two common ways to pay off your mortgage faster in Canada.

* Increasing your mortgage payment will permanently affect your future payments.

* Some lenders might only allow you to increase your regular mortgage payment amount, not offer extra payment flexibility.

* Making one-time prepayments or doubling up your regular mortgage payment can help reduce your debt.

* Always check with your lender before making any changes to your payment schedule.

By understanding how accelerated bi-weekly and weekly payments work, you can make informed decisions about managing your mortgage debt and achieving financial freedom.

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