December 5, 2023
Maximize Your Mortgage: The Power of Biweekly Payments
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Manzeel is an award-winning Mortgage Broker and the Owner of the Toronto-based mortgage, Everything Mortgages.
With 16 years of experience in the Canadian mortgage industry and a formal background in mortgage underwriting, Manzeel’s lending expertise gives him unique insight into whether a deal is feasible which empowers his clients to make more informed lending decisions faster.
He has been recognized as one of Canada’s Top 10 Mortgage Brokers by the national Canadian Mortgage Professionals (CMP) Association. Him and his team of 18 mortgage agents are proud to offer a mortgage experience that's built on honesty, trust, and integrity. He prides himself on the brokerage’s dedication to deliver an excellent client experience throughout the entire home loan process from pre-approval to post-funding.
Since moving to Toronto in 1998, Manzeel has successfully launched and scaled several businesses from the ground up, ranging from a mortgage brokerage and a vast real estate investment portfolio to a private financing eCommerce platform. He continues to be a leader in the real estate industry as he uses his analytical expertise to seek new real estate investment opportunities.
As a tech junkie and avid sports enthusiast, when Manzeel’s not working with clients, you can find him reading technology blogs, playing squash or watching tennis with his two boys.
When you are approved for a mortgage and decide on the amortization period, you then get to choose the frequency of your mortgage payments, or how often you want to pay. This is a pretty flexible mortgage element that allows Canadians to select from a variety of options. However, the more frequently you make your payments, the more you will save in interest over time.
One effective strategy is opting for biweekly mortgage payments. However, it’s important to understand how these payments work to ensure they provide the financial benefits you’re seeking while still fitting your budget. Here’s a comprehensive guide to help you make an informed decision about switching from monthly to biweekly payments.
Understanding Biweekly Payments: A Strategic Approach
Traditionally, homeowners make 12 mortgage payments per year. By choosing a biweekly payment plan, you pay half of your regular monthly amount every two weeks. Given that a year has 52 weeks, this results in 26 half-payments, or the equivalent of 13 full payments annually.
Adopting a biweekly payment schedule accelerates your mortgage payoff timeline and significantly reduces the total interest paid. For instance, on a 30-year fixed mortgage of $250,000 with a 4% interest rate, biweekly payments could save you close to $30,000 in interest and shorten your loan term by five years.
Even if you decide to move within a shorter time frame, such as ten years, you would still enjoy substantial interest savings and build more equity in your home, providing a stronger financial position for your next property purchase.
Navigating Biweekly Payments: What to Watch Out For
While some lenders offer biweekly payment programs, others do not, leading some homeowners to third-party services. Exercise caution and conduct thorough research before committing to any service, as fees and contract terms can vary widely.
DIY Biweekly Payments: Taking Control
If your lender doesn’t provide a biweekly payment option, you can still harness the benefits by making extra payments yourself. Divide your monthly mortgage payment by 12 and make an additional principal-only payment of this amount each month. Alternatively, save this amount monthly and make a lump-sum extra payment at the year’s end.
Before proceeding, confirm with your lender that your loan has no prepayment penalties and that additional payments will be applied directly to the principal. Biweekly payments are a smart financial move if your budget allows.
Exploring Your Mortgage Payment Options
In Canada, homeowners have a variety of payment schedules to choose from, each with its unique advantages:
Monthly: The standard option, where you make 12 payments per year on a fixed date.
Semi-Monthly: Payments are made twice a month, often on the 1st and 15th or the 16th and the last day of the month. This results in smaller, more frequent payments without changing the annual total.
Bi-Weekly: Payments are made every two weeks, not to be confused with biweekly accelerated payments. The annual total remains the same as monthly payments.
Bi-Weekly Accelerated: Payments are made every two weeks, but with this option, you end up making an extra payment annually, helping to reduce your principal faster.
Weekly: Payments are made every week, with the annual total equating to that of monthly payments.
Weekly Accelerated: Similar to bi-weekly accelerated, payments are made weekly, resulting in an extra payment annually.
At Everything Mortgages, we strive to help first-time homebuyers, small business owners, and hardworking professionals navigate their mortgage journeys. Whether it’s securing a loan or seeking better solutions, our team is here to guide you toward becoming mortgage-free sooner and building wealth faster. Reach out to us today to explore these strategies and more.
Note: This article is intended for informational purposes only and does not constitute financial advice. Please consult a financial advisor or mortgage professional before making decisions about your mortgage.
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