Definition
Accelerated payment is a bi-weekly or weekly payment option that calculates each payment by dividing the monthly payment by two (bi-weekly) or four (weekly), then multiplying by the number of annual payments. This mechanism creates the equivalent of a thirteenth month of payments per year, significantly reducing the effective amortization.
Example: a monthly payment of $2,000 gives $24,000/year. Normal bi-weekly would be $1,000 × 26 = $26,000/year — $2,000 more. On a $400,000 mortgage at 5% over 25 years, accelerated payments reduce amortization by approximately 3 to 4 years and save $20,000 to $30,000 in interest.
Accelerated payment is distinct from lump-sum payments (prepayment privileges): it is a frequency mode, not an off-cycle payment.