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Mortgage Payment Options2018-03-10T02:38:22-07:00

There are quite a few ways in which you can repay your mortgage amount. Most people opt for the standard monthly payments, but choosing a different payment method will help you pay off your mortgage in a shorter time.

Many lenders charge an extra fee if you change your payment method later on. Therefore, you should decide a payment option before you sign the deal and make sure it is mentioned in the contract. You will have to bear with the same payment method for the next few years. So consider all the options carefully and then choose one which suits you.

Monthly Payments

Monthly amounts are the most common type of payment options, and accumulate to 12 payments every year. You will have to pay an amount before a set date every month. The amount can be fixed for the whole period or change with market conditions, depending on the type of mortgage you choose.

Bi – weekly Payments

The bi-weekly payment option will require you to make a payment once every fortnight or twice in a month. Generally, the payment date is the same. For instance, you have to make a payment on the first and fifteenth of every month. Bi-weekly payments accumulate to 24 payments in a year.

These payments are 50% less than the monthly amounts. So you will end up paying the same amount in a year. This option does not allow you to pay off your mortgage in a lesser time.

Weekly Payments

A weekly payment is made once every week, and this accumulates to 48 payments in a year.  The total amount paid in a year remains the same.  Generally, you will be paying on the first, seventh, twenty first and twenty eight of every month.

The weekly payments are also not a suitable option for repaying back your mortgage in a shorter time period, but you might still be able to get very slight savings on the interest. However, they can be considered if you receive your pay check on a weekly basis.

Accelerated or Rapid Payments

Accelerated payments can help you in saving a substantial amount of money in the long run and paying off your mortgage earlier.

Bi-Weekly Rapid Payments

The amount for the bi-weekly rapid payment is the same as the regular bi-weekly payment, but you will have to pay it every two weeks. For instance, you may be required to pay every second Monday. This generally accumulates to 26 payments in a year because you may have to pay five times in two months as opposed to four. So every year, you pay a slightly greater amount which helps you in becoming debt free faster.

Weekly Rapid Payments

Weekly rapid payments are 25% of the monthly payments, and have to be paid every week on the same day every week. This means that you might even have to make five payments in a month as opposed to four. Weekly rapid payments accumulate to 52 payments in a year instead of 48.