Payment Frequency: How to Become Mortgage-Free Sooner

Posted on 09 May, 2019

Changing your payment frequency is one of the seemingly minor details that can have a significant impact on helping you become mortgage-free sooner. Simply put, payment frequency is how often you choose to make your mortgage payments.

Consider the following scenario:

Purchase Price: $400,000
Down Payment: $20,000
Interest Rate: 2.99%
Total Mortgage Amount(including CMHC fee): $395,200
 
 

Accelerated Bi-Weekly Payments

Monthly Payments
Payment Amount $934.12 $1,868.24
Total Interest Paid $144,994.34 $165,271.58
Mortgage Paid Off 22 Years 2 months 25 Years
By choosing to pay your mortgage bi-weekly instead of on a monthly basis, you save $20,327.24 over the course of your mortgage, and you pay it off 2 years and 10 months sooner! 
When is payment frequency determined?
During the mortgage application process, you will receive your mortgage approval (also referred to as a mortgage commitment). This document should outline all of your details, including your payment amount and frequency. Your Broker should spend some time going through this document with you to ensure everything is correct. They can also request a change to your payment frequency on your behalf at that time.
 
Can I change my payment frequency?
Yes. This can be done through your Broker, or by contacting your lender directly. Remember, even after your mortgage is closed, your Broker should be there to answer any questions or concerns you may have about your mortgage.

If you’re wondering how changing your payment frequency would affect your mortgage specifically, feel free to contact our office even if you are not a current client of ours. Our team is happy to help crunch the numbers and give you tips on becoming mortgage-free sooner! 


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