Choosing the Right Mortgage Payment Frequency
There are a lot of steps involved in setting up a mortgage, and the process can sometimes be overwhelming. Having the right information is a must because this will allow you to make informed decisions, and you will feel confident with your plan.
In terms of the frequency of your mortgage payments, this is generally left as the last step, and this choice is often made before your file is submitted to a lender for review. Most lenders will issue an approval with monthly payments, as this is the default option, and you will be able to choose your payment frequency when you sign the documents. Other lenders may issue their approval with your preferred frequency right from the start, so you will have options, and the choice will be yours to make.
Consider the different frequency options that are available so that you select the one that is best for you. There are six options you can choose from, including weekly, accelerated weekly, biweekly, accelerated biweekly, semi-monthly and monthly. Monthly payments are very straightforward because you will have a single mortgage payment every month that will fall on the same date. If you prefer to make two mortgage payments a month, the semi-monthly option is the way to go, and this payment will divide your monthly payment in half, and you will have to pay it twice per month.
Semi-monthly and bi-weekly are very different options, so do not confuse the two together. While they may sound similar, semi-monthly payments will be made fifteen days apart, whereas biweekly payments will be made fourteen days apart. This means semi-monthly payments will have a total of 24 payments every year, whereas biweekly payments will have a total of 26, so you would pay an additional two payments each year. You will not be paying more with this option because the number of your biweekly payments will be lower than the semi-monthly payments. You can also choose to make payments once a week with the weekly option.
There are accelerated options you can consider as well, and while these payments will be slightly higher, you will end up paying off your mortgage faster, so this would be very beneficial to you as you would be able to slash a couple of years off your mortgage. This is because you would be making roughly one additional monthly payment every year, and this would be applied directly towards your principal.
When it comes to your mortgage, you need to speak to an expert, and Collin Bruce will provide you with all the right information. Whether you are a first-time homebuyer or are looking for a mortgage advisor, we can help because we are one of the best mortgage companies in the Edmonton area. Our brokers will provide you with the best-fixed rate and will help you do a comparison. If you are interested in second mortgages, a reverse mortgage, a pre-approval, a no down payment mortgage or need to refinance your mortgage, we do it all, so if you want to speak to a mortgage specialist, contact us today!