A great way to save on interest costs and reduce the life of your mortgage is by making annual principal payments.
If you choose a closed mortgage, you may prepay up to 10% of the original principal amount of your mortgage once in every 12-month period. The prepayment is applied directly to the principal of your mortgage.
You may also Double Up your regular mortgage payments (of principal and interest).
You can make a principal prepayment of $500 or more to your open mortgage as often as you like!
Plus, you can make principal prepayments of any amount you wish on your mortgage principal at renewal time.
A principal prepayment of $2,000 a year can make a substantial difference in the time it takes to pay off your mortgage. Take a look:
Example: $80,000 Mortgage at 8.00%*
Mortgage 25-year Amortization
Effect of $2,000 annual prepayment
Mortgage repaid (years)
25
14.75
Total interest cost**
$103,165
$55,887
Interest savings** vs. 25-year mortgage
N/A
$47,278
* Calculated, semi-annually not in advance.
** Over the life of the mortgage, assuming constant interest rate throughout amortization period.
Whatever home buying stage you're in, we can offer you real savings and sound advice. Contact a mortgage specialist today!
