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Accelerated Biweekly Mortgage Payments
Accelerated biweekly payments split your monthly mortgage payment in half and are paid every two weeks. There are 26 two-week periods in a year, so you make the equivalent of 13 monthly payments instead of 12. That one extra payment per year shortens your amortization period and saves you interest.
Accelerated Biweekly Mortgage Payments Quick Facts
- Half your monthly payment, paid every two weeks
- 26 payments made per year, equal to 13 monthly payments
- The extra yearly payment goes straight to the principal
- Shortens your amortization and saves interest
- Differs from regular biweekly, which totals the same annually as monthly payments
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What Are Accelerated Biweekly Mortgage Payments
With an accelerated biweekly schedule, your lender takes your regular monthly payment, divides it by two, and collects that amount every two weeks. Over a year, you make 26 payments, which equals 13 full monthly payments rather than 12.
The keyword is accelerated. A regular biweekly payment spreads your annual total over 26 smaller payments, so you pay the same each year as you would with monthly payments.
Why Accelerated Biweekly Payments Matter for Mortgages
That one extra payment each year goes directly toward the principal and compounds over the life of the loan. The FCAC mortgage calculator notes that, with an accelerated payment schedule, you can reduce your amortization and save thousands of dollars in interest. For many borrowers, it is the simplest way to finish sooner without an overhaul of their budget.
It pairs well with other prepayment methods. Combining accelerated payments with the occasional lump sum payment can take years off your mortgage, as shown in nesto’s guide to paying off your mortgage faster.
Accelerated Versus Regular Payment Frequencies
Lenders offer several payment frequencies, and the accelerated ones are the only two that include an extra payment applied directly to your mortgage principal.
Accelerated Biweekly. Half the monthly payment every two weeks, 26 payments a year, equal to 13 monthly payments.
Accelerated Weekly. A quarter of the monthly payment each week, 52 payments a year, with the same extra-payment effect as accelerated biweekly.
Regular Biweekly. The total annual payment divided by 26, 26 payments a year, equal to 12 monthly payments, which is the same as paying monthly.
Regular Weekly. The total annual payment divided by 52, 52 payments a year, equal to 12 monthly payments, which is the same as paying monthly.
As an example, if your monthly payment is $2,000, an accelerated biweekly payment is $1,000 every two weeks. Over a year, you pay $26,000 rather than $24,000, an extra $2,000 against principal, which can shorten a 25-year amortization by roughly three years.
Common Mistakes and Misunderstandings About Accelerated Biweekly Payments
- Assuming regular biweekly and accelerated biweekly save the same amount
- Thinking biweekly payments lower the interest rate, when they only reduce the principal
- Overlooking the fact that the extra payment must fit your cash flow
- Forgetting that prepayment privileges still apply on top of accelerated payments
- Expecting big savings without keeping the same payment schedule for years
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Frequently Asked Questions About Accelerated Biweekly Payments
What is the difference between accelerated and regular biweekly payments?
An accelerated biweekly payment is half your monthly payment, so you make the equivalent of 13 monthly payments a year. A regular biweekly payment is your annual total divided by 26, so you pay the same annually as with a monthly payment.
How much can accelerated payments save?
It depends on your balance, rate, and amortization, but an extra yearly payment can shorten a 25-year amortization by about 2 to 4 years and save thousands in interest.
Do accelerated payments lower my interest rate?
No. Your rate does not change. Accelerated payments save on interest by applying more money to the principal each year, so the balance falls faster.
Are accelerated biweekly payments available in Canada?
Yes. Most Canadian lenders offer accelerated biweekly and accelerated weekly options, and you can usually switch frequencies at renewal, or sometimes mid-term, depending on your contract.