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Because Canadian fixed-rate mortgages compound semi-annually, not monthly — a convention set in the Interest Act. Dividing the annual rate by twelve overstates the periodic rate. The correct conversion is to take the half-yearly rate and find its sixth root: i = (1 + r/2)^(1/6) − 1. At 4.29% that produces a monthly rate of 0.354346% rather than 0.357500%. The difference looks trivial and is not: over a $520,000 mortgage it changes the payment by several dollars a month and the lifetime interest by thousands.

It takes your monthly payment, halves it, and charges that half every two weeks. Because there are 26 two-week periods in a year rather than 24, you make the equivalent of thirteen monthly payments instead of twelve. The extra payment goes entirely to principal. On the $520,000 example on this page, accelerated bi-weekly retires the mortgage in 21.8 years instead of 25 and saves roughly $47,900 in interest, without any change to the rate or the term.

No, and the names are close enough to be genuinely misleading. Plain bi-weekly divides your annual cost across 26 payments, so you pay the same amount over the year and finish in exactly the same 25 years. Accelerated bi-weekly divides the monthly payment in half and pays it 26 times, so you pay about 8.3% more each year. Only the accelerated version shortens the amortization. If a lender offers you bi-weekly, ask which one it is.

Less than you would like, and the ratio is set by the rate rather than by your lender. On a $520,000 mortgage at 4.29% over 25 years, the first payment of $2,817.67 splits into $1,842.60 of interest and $975.07 of principal — about 35 cents of every dollar. That share climbs every month as the balance falls. The calculator plots the full schedule so you can see where the crossover point sits for your own numbers.

It lowers the payment and raises the total cost. The same $520,000 at 4.29% costs $2,817.67 a month over 25 years and $2,558.74 over 30 — $259 less per month. But total interest rises from $325,300 to $401,147, so the monthly relief costs about $75,800 over the life of the loan. A longer amortization is a cash-flow tool and a qualification tool. It is not a savings tool.