Mortgage Blog

Which Payment Frequency is Best?

March 22, 2018 | Posted by: Brandi Pierik and Matthew Pierik - Red Deer and Calgary Mortgage Brokers

Helpful Hints for Paying Off Your Mortgage Faster!

Which Mortgage Repayment Frequency is Best?

The schedule you choose for your mortgage repayment can have a significant impact on the amount of money you put towards your principal balance. The more you can take off the top of your principal balance, the less interest you’ll pay throughout the life of your mortgage. Even paying a bit more towards your mortgage each year can help bring you closer to your ‘mortgage burning’ date.

You may be thinking: ‘I don’t have extra money to put towards my mortgage’. But, even if you’re in your very first mortgage, there are some small steps you can take now to reduce the overall amount of money you pay towards your mortgage until the day you become mortgage-free.

One of the easiest ways to put more money towards your mortgage while not having a significant impact on your cash flow is moving to a different payment schedule, such as opting for accelerated biweekly payments. Not to be confused with biweekly payments (24 payments per year), accelerated biweekly payments (26 payments per year) won’t only pay your mortgage off quicker, but they’ll also save you a significant amount of money over the term of your mortgage. This option means you’re making one additional monthly payment per year, which can really add up over the course of your time as a mortgage holder.

More options to speed up payment
Another prepayment option involves taking advantage of flexible payments. Most lenders allow you to increase your regular payment up to a set maximum, such as 15%, while others allow you to double up your payments.

If, for instance, you have a $1,000 per month mortgage payment and increase it by 15% to $1,150, you could speed up payment on a $200,000 mortgage by as much as five-and-a-half years.

Even rounding up your mortgage payments a few dollars each payment can help make your balance decline sooner. If you round up your mortgage payment from, say, $766 to an even figure such as $800, you can feel confident in knowing that every extra bit is going towards your principal.

Have questions about paying your mortgage down faster or your Red Deer mortgage options in general? Answers are just a phone call or email away!

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