Alan2005

Yeah. I guess I was just taken aback by the thought of this happening - as JonboyE says above, if you don't realize then it could be quite alarming if you think you are coming to the end of your mortgage but suddenly find you've got a year or two left.

lmartin999

It came as a surprise to me as I was waiting for a letter telling me my payment would be going up. Of course it never did and my payment didn't change. With the odd quarter of a percent its not a big deal, but you could easily get to the point where your payment wouldn't even be covering the interest. I'm not sure whether in that case they do act. I now overpay, though of course not by as much as I think I am

Almost Canadian

I found this out after I had signed up for a 5 year fixed. I didn't know how long it would take to be earning a decent salary and I wanted the security of a "fixed" payment. When I realised that it would not go up regardless I was more than a little miffed.

Hey ho

Atlantic Xpat

Hmm. I have a variable rate....0.82% below prime til 2013. Payment very definately varied with changes in interest rate until I told them not to drop it any further as rates decreased. I think I'm paying at an equivalent of 4.25% or so meaning that I am paying down my mortgage faster. That's a good thing.

brizzle

So does anyone know the answer to this? - if you initially took out a mortgage with CMHC insurance (less than 20% down) and now if you remortaged, with some capital paid down and an increase in property value, the mortgage would now be less than 80% of the property value. So would those additional insurance amounts disappear from the remortaged loan or are you stuck with them??

iaink

Isnt that exactly what I was asking? You refinance the balance as is, with no additional premium.

The reason I asked was that some mortgages offer a "skip a payment" option. I thought mine did, but it turns out (so they say) that if its CMHC covered that option is not in play. Something to clarify with them next time around I guess, although obviously its not an option I want to take up unless absolutely necessary.

lmartin999

I didnt have CMHC this time around, but I did remortgage a year in to a 5 year closed mortgage as rates had changed a lot and i wanted a better deal. It required a revaluation. I would assume that the valuation at the point of the new mortgage would be the one used in any determination - be it in your favour or not.

brizzle

Apologies, I must have skipped over your post, but seen the subsequent answers

Flossie and Jim

Its also worth going for biweekly payments instead of monthly too - for the sake of the equivalent of one more monthly payment a year, it shaved about 9 years off the mortgage!

iaink

Id get confused as I get paid bimonthly... bound to end up short at some point when that extra payment slips out. Better I think for me to be able to make an extra payment now and then instead... YMMV.

Alan2005

I get paid bi-weekly so that would make sense. Though everyone else in the office has just changed over to twice monthly for some reason which defies logic.

johnh009

Remember, there are accelerated weekly/biweekly payments and the standard form of weekly/biweekly payments. It is only with the accelerated payment method that you really make a gain, like yourselves. With the standard method, the gain is peanuts in comparison.

Accelerated is where they divide your annual total payment by 48 and not 52 (for weekly or 24/26 for biweekly), thus you end up making an additional payment within the year. This is where you make most of the gains and not by the fact that you are paying more frequently.

airbornesapper

Here is a good blurb which outlines the gains to be made by an accelerated payment schedule:

"Accelerated bi-weekly payments

http://www.lendingmax.ca/artman/publ...e_payments.php

Bruce Schoenne, RI, AACI, P.App.
Aug 11, 2009 - 7:46:00 PM
RSS?
How do accelerated bi-weekly mortgage payments work and how can they help pay my mortgage off quicker?

If you're looking for ways to pay off your mortgage quicker, you have three basic options; reduce your amortization period, increase your monthly mortgage payment or change the way you make your payments.

If changing the way you make your payments sounds appealing, than accelerated bi-weekly mortgage payments might be just the ticket.

Not to be confused with semi-monthly mortgage payments (24 payments per year), accelerated bi-weekly mortgage payments (26 payments per year) will not only pay your mortgage off quicker, but it's guaranteed to save you a significant amount of money over the term of your mortgage.

Here's how it works.

Let's say you have a mortgage of $100,000, an interest rate of 5.00% and an amortization period of 25 years. Your monthly mortgage payment would be $581.60 and your total payments for a year would be ($581.60 x 12) $6,979.20.

To understand the savings accelerated bi-weekly mortgage payments can make, take the monthly mortgage payment of $581.60 and divide it by two ($581.60 / 2 = $290.80). Then take that payment and multiple it by 26 to arrive at your total of all payments for the year ($290.80 x 26 = $7,560.80).

There's the difference. Using the monthly mortgage payment plan, you've made a total of $6,979.20 worth of payments for the year, while using the accelerated bi-weekly mortgage plan you've made $7,560.80 worth of payments, a difference of $581.60. Basically with accelerated bi-weekly mortgage payments, you're making one additional monthly payment in the year.

Using this example, you would reduce the amortization on your $100,000 mortgage from 25 years to just over 21 years and a total savings on interest, over the life of the mortgage, to just over $12,000.

If you can possibly find a way to make accelerated bi-weekly mortgage payments, do it! You'll thank yourself later.

Looking for more information on accelerated bi-weekly mortgage payments? "

If you opt for 'Accelerated weekly' it reduces the term to 19 years and change.

I went this way, and payed off my mortgage in 14 years 11 months on an original 25 year amortization, with some additional mortgage pay down applied in addition to the gains from making accelerated weekly payments.

Almost Canadian

I have to admit that I am very surprised by that figure. I fail to see how the amortization period would reduce by more than a third simply by making (in essence) one extra monthly payment each year.

Now, if the original amortization period was 50 years, as opposed to 25, I might be convinced!

lucieg

I pay my mortgage accelerated weekly (I get paid semi-monthly) paying every Friday is actually quite easy as it's not a big sum every week I don't really notice it like I would with one or two big chunks coming out every month and paying accelerated lets me pay it off quicker