Another portion of the property ownership puzzle is the payment frequency options. Depending on your cash flow, the amount of each payment and the number of payments per year, a property owner can save significant money in interest paid over the term of the loan. Listed below are some of the options available.
The most common frequency type is the monthly payment option. With a monthly payment, the payment is typically due exactly one month from the day on which your mortgage started. In many cases; however, the actual due date can be changed to a more memorable or convenient date such as the 1st or 15th of the month.
With a semi-monthly option, the buyer makes two payments per month. Generally, the payments would be due on the 1st and 16th. This option allows you to make your payments in smaller amounts and may help keep your cash flow consistent across the entire month rather than having a large payment due out of a single paycheck.
As with the semi-monthly payments, the accelerated bi-weekly option allows you to make smaller but more frequent payments. With this option, you’ll make a payment every other week and means twice a year you’ll make three payments instead of just two. This will increase the speed at which you repay your loan.
Another option is to make a weekly payment which means there are five times during the year when you would make five payments instead of four. This option is another means of keeping your cash flow consistent.
Your payment frequency option could save you money in interest by letting you pay off your mortgage sooner. Ratesheet.ca mortgage calculator can help you determine what the impact of the different options will have on your interest due.