Bi-weekly payment schedule designed to reduce principal faster than a standard bi-weekly plan.
Accelerated bi-weekly payments are mortgage payments made every two weeks in an amount that results in the equivalent of one extra monthly payment each year.
Borrowers often choose an accelerated schedule to reduce interest cost and shorten the repayment path without committing to irregular lump-sum prepayments.
FCAC says an accelerated weekly or bi-weekly option puts more money toward the mortgage than a standard monthly structure and can save interest because it is roughly equivalent to making one extra monthly payment per year.
The key distinction is between regular bi-weekly and accelerated bi-weekly. A regular bi-weekly payment usually divides the monthly mortgage amount across 26 payments. An accelerated bi-weekly payment is often set at half the monthly amount, which means 26 half-payments add up to 13 monthly payments over the year rather than 12.
That extra annual payment does not change the mortgage rate by itself. What it changes is how quickly principal is reduced under the chosen payment schedule.
If the regular monthly mortgage payment is $2,400, a regular bi-weekly schedule might work out to about $1,107.69 per payment. An accelerated bi-weekly schedule might instead be set at $1,200 every two weeks. Over a year, that difference pushes more money against principal.
Accelerated bi-weekly is not just another name for regular bi-weekly. The payment amount is usually higher.
It is also a mistake to think accelerated bi-weekly automatically makes every mortgage better. The borrower still needs enough monthly cash flow to support the higher annual payment pace.
Payment-frequency options, rounding, and recalculation methods vary by lender. Some lenders also combine accelerated schedules with specific prepayment or renewal rules, so borrowers should confirm the exact payment amount before switching frequency.