Have you ever heard of a mortgage accelerator program?

By Heather Rose

Much like those debt consolidation and settlement lawyer commercials (“It’s my money and I want it now!” anyone?), advertisements for mortgage accelerator programs seem to pop up during hard times or in the middle of a gloomy economy.

Mortgage Accelerator Programs promise to help you pay off your mortgage in half the time, but despite the common misconception, they’re not the same as debt consolidation where a company pays off the bank for you and you then owe them the money instead. Mortgage Accelerator Programs are something like a combined bank account where you deposit all of your money, and it makes payments for you.

It’s not a scam at all, but it’s not really worth your time or the extra money. Why? Because you can do it yourself for free and not be trapped within a mortgage accelerating bank account. In other words, what a Mortgage Accelerator Program does for you (for a fee), you can easily accomplish on your own.

The basic principle of most Mortgage Accelerator Programs is that making payments every two weeks instead of once per month both a) slows down the accruement of interest and b) in a 52-week year, you’re making 26 mini-payments which equals one extra whole mortgage payment per year. For example, if your mortgage payment is $1,000 monthly, pay $500 biweekly instead of one lump sum of $1,000. If you do this biweekly, you’ll end up with thirteen payments of $1,000 instead of twelve.

Some lending and baking companies offer biweekly payment plans. They may offer this service completely free, but if there are charges they’ll be far less than the cost of a Mortgage Accelerator Program.

There are some things to check up on before beginning this process. The first is that the bank will be aware that you want the payments applied to the principal and not the next payment. The second thing you should be sure of is that there are no prepayment penalties on your mortgage.

Heather Rose is a Toronto based Journalist, who is a regular contributor to the Muddy York Real Estate Blog.  Heather website is located at heatherroseportfolio.squarespace.com.

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