But it does, check with your bank if you have a mortgage and are not convinced. Over the life of the average mortgage (25 years), the interest is significant and it is this you are reducing.

It wouldn't reduce it as much as suggested. HSBC offer a simple calculator.

I did $300,000 over 25 years at 4%.

Accelerated bi-weekly pays it off in 21.9 years, saving around 19K in interest.

Looked at a few calculators available...this one is quite well done:

http://www.dominionlending.ca/hosted...biweekpaym.php


And the Feds Calculator...has pretty good explanations to go along with it:

http://www.fcac-acfc.gc.ca/itools-io...lator-eng.aspx

They are all pretty close with regard to the dollars and cents saved by using the accelerated approach.

I found the savings on 300K at 4% (same amortization period) was around 25K (based on what the calculators spewed out for me...

Either way...quite a few beer tokens...

No it does not- it was only for the initial purchase. Your interest rate is pretty decent- just check the small print for paying off early though, you could be subject to and Interest rate Differential penalty which could be hefty.

No, the insurance is added to the mortgage at the outset e.g.

$100,000 mortgage principal
$1500 CMHC insurance premium

Total mortgage is now $101500.

The insurance is part of the mortgage, which you have been paying down over the period. If your house value increases to having more than a 20% equity position, then you will not have to pay CMHC premiums again going forward.

Yes, you are correct. Apart from paying accelerated weekly, I managed to get my mortage down quickly because, as interest rates went down, I maintained the same payment. Beware if they go the other way though.

They tell me that in order to remove the CHMC lein that prevents the skip a payment option applying to the mortgage, I would need to refinance... which involves lawyers who charge more than my mortgage payment costs anyway, so it appears that if renewing (even with a different mortgage structure), rather than starting a whole new mortgage, then the lein is still there, even if its not actually costing you anything at that point.

Only important if the option to skip a payment is important to you, so I can live with it I guess.

Do you think the skip a payment is a wise move, unless you are really stretched of course? The interest is still there and has to be paid eventually. It is like an accelerated payment mortgage in reverse.

No I agree, not a good idea, but if the car suddenly dies and you end up with a big bill and your savings are tied up elsewhere at the time it might be a convenient option over running up the credit card balance.

Never used the option yet in ten years, but then again it turns out I couldnt if I had wanted to anyway. It strikes me that most of the people who have mortgages started at less than 20% down are in the same boat, regardless of what the glossy advertising copy says.

Couple of questions about mortgages :-

If you're only putting 5% down, does the interest rate the bank will offer your differ significantly from if you was putting 20% down?

Do they vary the interest rate according to your credit score?

Essentially yes. The banks have what they call posted rates (what they post on their websites and in branch). This is a bit like the sticker price on a car lot. The dealer tries to sell as close to the sticker price as possible and it is up to you to negotiate whatever you can off it.

The riskier you are as a borrower the less negotiating room you have. The CMHC insurance goes a long way to mitigate the bank's risk but they would still rather lend to people who will pay the mortgage, rather than leave them to sort out a default, so they will take your credit score into account.

Look at ING Direct and President's Choice financial, and also check your local credit union, to see what rates they are offering. This should be your target for negotiating with the bank.

We are in same boat as G77, wanting to buy, 5% deposit only, reasonable credit scoring, not borrowing up to our ceiling etc. Going to bank on tuesday, but ING and PC appear to offer 2.20 or 2.25 variable including options to pay lumps off as desired; at first glance HSBC will offer us nowhere near this as we are not premier customers. I will try negotiating with bank and let you know how we get on, if not we will try broker or ING or PC

Be interested to know what the outcome is.... I have been putting off applying for a mortgage for weeks now.

Presumably ING etc will alter their rates according to risk also?

With a limited downpayment you are required to have CMHC backed insurance, and the premium is a sliding % of the borrowed amount, which will be tacked onto the amount you are borrowing to buy the property. Less downpayment = more compulsory insurance premium added.


If you have a poor credit rating I suspect that the low risk low interest lenders will just decline to lend to you.

I don't think it's been mentioned so far but, as an added dimension, CMHC or one of the other possible insurers, can/may decline to insure the mortgage, at which point the borrower is sweet out of luck.