Buying your first home: Three steps to successful mortgage shopping

-Table of contents 

Step 1: Know what you need and want in a mortgage 

Payment frequency 

Payment frequency refers to how often you make your mortgage payments. Options include:

 
Pay Mortgage from less frequent to more frequent
  • monthly
  • semi-monthly
  • biweekly
  • accelerated biweekly
  • weekly
  • accelerated weekly.

 

 

 

 

 

 

 

Your payment frequency is set when your mortgage is first arranged, but you may be able to change it afterwards, usually without having to pay a fee.  

Accelerated payment ​options 

Accelerated weekly and accelerated biweekly payments can save you thousands, or even tens of thousands in interest charges, because you’ll pay off your mortgage much faster using those options. 

The reason is that with the “accelerated” options, you make the equivalent of one extra monthly payment per year. Regular weekly and biweekly options do not provide the same benefits. 

Payment options details 

Payme​nt frequency
Description
Monthly  One payment per month for a total of 12 for the year.
Semi-monthly (twice a month) Two payments per month for a total of 24 for the year.

With this option, the total amount you pay over the year is the same as with the monthly payment (monthly payment ÷ 2).
Biweekly (every two weeks) A payment every two weeks. Since there are 52 weeks in a year, the total number of payments over the year is 26 (52 ÷ 2). This option keeps the total payment over the year the same as with the monthly payment (monthly payment x 12 months ÷ 26).
Accelerated biweekly A payment of half the monthly payment every two weeks. Since there are 52 weeks in a year, you will make 26 payments a year (52 ÷ 2). To calculate the amount of your accelerated biweekly payments, divide your monthly payment by two (for example, $1,000 ÷ 2 = $500).

With this payment frequency, you will make the equivalent of one extra monthly payment per year. You will pay off your mortgage faster and save in interest charges.
Weekly One payment per week for a total of 52 payments for the year. The total annual payment remains the same as with the monthly payment (monthly payment x 12 months ÷ 52).
Accelerated weekly A payment of one quarter of the monthly payment every week. To calculate the amount of your accelerated weekly payments, divide your monthly payment by four (for example, $1,000 ÷ 4 = $250).

With this payment frequency, you will make the equivalent of one extra monthly payment per year. You will pay off your mortgage faster and save in interest charges.

Example: Monthly vs. accelerated biweekly 

John is trying to decide between paying his mortgage monthly and paying accelerated biweekly.
 
Details 
  • ​Mortgage principal: $200,000
  • Amortization: 25 years
  • Interest rate: 4.5% for the entire mortgage amortization period.

Monthly and accelerated biweekly payment comparison

 
Monthly
Accelerated biweekly
Number of payments per year
12
26
(52 weeks a year ÷ 2)
Payment
$1,107
$553
Total payments per year (principal and interest)
$13,283
$14,390
Interest paid over the amortization period
$132,084
$112,053
Interest saved
-
$20,031
Number of years to repay the mortgage
25.0
21.7
Years saved
-
3.3
 

With the accelerated biweekly payments, John will pay off his mortgage 3.3 years faster and save more than $20,000 in interest. 

Mortgage Calculator tool

Use FCAC’s Mortgage Calculator tool to find out how these payment options will affect the length of time it takes you to pay off a mortgage loan and how much interest you could save.  

 

 
[ 1|2|3|4|5|6|7|8|9|10|11|12|13|14|15|16|17|18|19|20|21 ]​​
​​