Accelerating Your Payment Schedule
RBC Royal Bank offers you this great choice of payment options:
- Monthly
- Semi-monthly
- Bi-weekly
- Weekly
- Accelerated bi-weekly
- Accelerated weekly
You also have the freedom to choose the day of the week or date of the month your mortgage payment is due, so you can schedule your payment to coincide with your paycheque - a convenient budgeting feature.
Increasing Your Payment Frequency
You can save interest by increasing your mortgage payment frequency. When you select an accelerated weekly or bi-weekly payment option, you are essentially making the equivalent of one additional monthly payment each year which will help pay off your mortgage faster.
This chart illustrates how you can reduce your amortization period and save on interest costs by choosing a more frequent payment schedule.
Example: $80,000 Mortgage at 8.00%1
| Payment |
Amount |
Amortization (Years) |
Total Interest Cost2 |
| Monthly |
$610.58 |
25.0 |
$103,165 |
| Semi-monthly |
$305.29 |
24.9 |
$102,238 |
| Bi-weekly |
$281.81 |
24.7 |
$101,125 |
| Weekly |
$140.91 |
24.6 |
$100,697 |
Accelerated
bi-weekly3 |
$305.29 |
19.9 |
$78,167 |
| Accelerated weekly4 |
$152.65 |
19.9 |
$77,874 |
1 Assumes constant interest rate throughout amortization period. Compounded semi-annually, not in advance.
2 Over the life of the mortgage.
3 Monthly payment divided by 2.
4 Monthly payment divided by 4.
In this example, choosing accelerated weekly payments instead of monthly payments on an $80,000 mortgage would save you more than $25,000 in interest costs, and cut more than 5 years off the life of your mortgage.
You can change your payment frequency without cost whenever your mortgage is up for renewal or during your mortgage term.
|
