What Are Accelerated Mortgage Payments?
WHAT ARE ACCELERATED MORTGAGE PAYMENTS?
Accelerated mortgage payments allow the borrower to repay their mortgage faster. The major difference is how the payments are calculated.
For example, say Jon Snow has a mortgage with monthly payments of $1,800.
Regular bi-weekly calculations are: Monthly payment ($1,800 x 12) / 26 = $830.77 every second Friday. Total payments in a year are 26.
Jon Snow has decided he’d like to repay his mortgage faster using accelerated bi-weekly payments.
Acc. Bi-weekly calculations are: Monthly payment ($1,800 / 2) = $900 every second Friday. Total payments are still 26 per year.
The slightly higher payment equates to approx. 1 extra mortgage payment per year. This can save you thousands in interest over the course of your mortgage.