You have just completed the mortgage approval process, and the inevitable question from your mortgage broker or bank adviser crops up: do you want to make weekly or monthly payments? If you answer weekly payments (my suggestion!), be aware that your choice doesn’t end there.

First of all, there is a big difference between an accelerated weekly payment and a regular weekly payment. The accelerated weekly payment equals the monthly payment divided by 4 whereas the regular weekly payment is calculated on the monthly payment multiplied by 12, divided by 52.

To illustrate this calculation, let's take a monthly payment of $1163.21 on a $200,000 mortgage at an average rate of 5%, amortized over 25 years.

The accelerated weekly payment amounts to $290.80 a week and the regular weekly payment would be $268.01 a week.

This means you would be paying $22.79 more each week with the accelerated payment, which equals an additional monthly payment per year.

If you choose the regular weekly payment (very rarely offered), you will hardly save any amount compared to a monthly payment (approximately $550 over 25 years). On the other hand, if you choose the accelerated payment, you will save more than $23,896 on a $200,000 25-year mortgage with an average interest rate of 5%.

So, the question you now have to ask yourself is whether you want to make the effort to pat $23 more a week to save nearly $24,000 after 25 years.

Worth thinking about, isn’t it?

The content of the present website is protected by copyright which is the exclusive property of Mortgage Planners – Mortgage Brokering Firm.