For many Canadian homeowners, the mortgage is their single largest expense. So, wouldn’t it be great if there was a simple way to pay it down faster, save on interest, and ultimately own your home sooner? Enter the bi-weekly mortgage payment strategy.

While it might seem like a small tweak, switching from monthly to bi-weekly payments can have a surprisingly powerful impact on your mortgage journey. Let’s break down how it works and why it might be the smart move for you.

What is a Bi-Weekly Mortgage Payment?

A standard monthly mortgage involves 12 payments per year. With a bi-weekly mortgage, you make a payment every two weeks.

Here’s the key: Instead of dividing your monthly payment by two (and thus making the same total payment over a year), a true bi-weekly payment is half of your regular monthly payment.

Let’s look at the math:

• Monthly Payment: You make 1 payment per month x 12 months = 12 payments per year.
• Bi-Weekly Payment: You make half your monthly payment every two weeks. Since there are 52 weeks in a year, this means you make 26 half-payments.
• The Magic: 26 half-payments actually add up to 13 full monthly payments per year (26 / 2 = 13).

That extra “thirteenth” payment each year is where the magic happens! You’re essentially paying one extra full monthly payment every year without feeling a significant pinch in your regular budget.

The Benefits of Going Bi-Weekly

1. Significant Interest Savings: This is often the biggest motivator. By making that extra payment each year, you’re reducing your principal balance faster. Because mortgage interest is calculated on the outstanding principal, a lower principal means less interest accrues over the life of the loan. Over 25 or 30 years, these savings can add up to thousands, even tens of thousands of dollars.
   
2. Shorter Amortization Period (Own Your Home Sooner!): Reducing your principal faster also means you’ll pay off your mortgage sooner. Depending on your mortgage size and interest rate, a bi-weekly payment schedule could shave years off your amortization period, allowing you to be mortgage-free much earlier than planned. Imagine the financial freedom of no longer having a mortgage payment!
   
3. Aligns with Pay Cycles: Many people get paid bi-weekly. Scheduling your mortgage payments to align with your paychecks can make budgeting simpler and more manageable. You won’t have to save up a larger lump sum for one monthly payment.
   
4. Discipline and Automation: Once set up, bi-weekly payments are typically automated. This provides a consistent and disciplined approach to accelerating your mortgage payoff without requiring you to manually make extra payments.
   

Is Bi-Weekly Right for You? Considerations

While the benefits are clear, a bi-weekly payment strategy isn’t for everyone. Consider these points:

• Cash Flow: Do you have enough consistent cash flow to comfortably make the slightly more frequent payments? While each individual payment is smaller than a monthly one, they do occur more often.
• Mortgage Type: This strategy works best with traditional principal and interest mortgages. If you have a highly variable income or a different type of loan, discuss it with your lender.
• Prepayment Penalties: Most Canadian mortgages allow for some level of prepayment without penalty. Bi-weekly payments typically fall within these limits. However, always confirm with your lender or mortgage agreement to ensure you won’t incur any fees.
• Budgeting Style: If you struggle with budgeting or prefer fewer, larger transactions, a monthly payment might feel more comfortable.

How to Switch to Bi-Weekly Payments

If you’re interested, switching is usually straightforward:

1. Contact Your Lender: Reach out to your bank or mortgage provider. They can explain your options and walk you through the process.
2. Confirm Details: Ensure you understand how the bi-weekly payment will be calculated and verify there are no hidden fees or penalties.
3. Set Up Automation: Have your payments automatically debited from your account to ensure consistency.

Switching to bi-weekly payments isn’t just a clever strategy—it’s a proven financial optimization tool. You’ll pay less interest, own your home faster, and gain more flexibility in your long-term financial planning.

Looking for Mortgage experts who can assist you in current loans, refinance and advise you based on the current mortgage? At Cannect, we help Canadians take control of their mortgages and make every dollar work harder.

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Take control of your mortgage. Turn time into savings.
Visit Cannect today and start paying smarter — one bi-weekly step at a time.