The golden rule of mortgages is this, the longer you take to pay it off, the more money you give the bank. So your goal should be to pay your mortgage off as fast as comfortably possible. Listed here are payment options for your mortgage. Knowing these options before visiting a Brampton mortgage broker will give you a head start.
Typical payment options:
Monthly- this is the most comfortable option and unfortunately the slowest. Many people choose it, because it’s the easiest as they only have one payment per month and it’s the lowest available payment.
Semi monthly- These are 2 monthly payments, for a total of 24 payments per year. You’re paying the same amount annually as your monthly payment.
Bi Weekly– Payments every two weeks. It’s your total annual mortgage payment divided by 26. Total of 26 payments per year. Although you’re making 2 extra payments per year, it isn’t any faster than monthly or semi monthly, because the payments are less.
Weekly- Payments are weekly. It’s your annual mortgage divided by 52, for 52 payments. Again this isn’t any faster.
Accelerated Payment Options:
Accelerated Bi-weekly: Payments every two weeks, but you’re splitting the monthly payment instead of the total annual. This gives you two extra payments per year at the larger amount. This will help pay your mortgage down faster.
Accelerated Weekly: Payments are made weekly but again you’re splitting the monthly payment instead of the total annual divided by 52. This means 52 payments at a slightly higher amount, meaning a quicker way to pay off your mortgage.
To break this down, on a $250,000 mortgage at 2.44% interest on a 5 year term, 25 year amortization you end up paying off $5,968.78 more on an accelerated weekly, versus a monthly.
Contact me today for more information on mortgages.
