Canadian mortgages with semi-annual compounding and accelerated payment frequencies.
Canadian mortgages are unique: the Interest Act of Canada requires semi-annual compounding of the nominal rate regardless of payment frequency. For monthly payments, the posted rate must be converted to an effective monthly rate via convertCompounding(rate, 2, 12). Accelerated bi-weekly payments are simply half the monthly payment paid every two weeks; because you make 26 payments per year rather than the 24 that a pure bi-weekly schedule implies, you effectively make one extra monthly payment per year, shortening the mortgage by 2–4 years. CMHC mortgage insurance is mandatory for high-ratio mortgages (LTV > 80%) and the premium is rolled into the loan.
Canadian rate conversion
Monthly rate = (1 + r_nominal/2)^(2/12) − 1
Accelerated bi-weekly payment
Accelerated bi-weekly = Monthly payment ÷ 2
CMHC premium
CMHC premium = Loan amount × Premium rate
Section 6 of Canada's Interest Act limits the rate at which interest may compound to no more than semi-annually for mortgages. This was intended to protect borrowers from excessively frequent compounding. In practice it means the effective interest rate is slightly lower than an equivalent US mortgage at the same nominal rate.
Regular bi-weekly divides the annual payment total by 26 — you pay the same annual amount as monthly, just split differently. Accelerated bi-weekly takes the monthly payment and divides it by 2, giving you a slightly larger bi-weekly payment. Because 26 × (monthly/2) > 12 × monthly, you're paying extra each year, building equity faster and shortening the amortization by 2–4 years.
You need CMHC (or Sagen/Canada Guaranty) mortgage insurance if your down payment is less than 20% of the purchase price. The insurance protects the lender, not you, but it enables higher-ratio mortgages that lenders would otherwise decline. Properties over CA$1 million are not eligible for high-ratio insurance and require a minimum 20% down payment.
CMHC-insured mortgages are capped at 25 years. Conventional mortgages (≥20% down) can have up to 30 years, and some lenders offer 35 years, though this is less common. Longer amortizations reduce monthly payments but significantly increase total interest paid.