![]() ![]() With an accelerated mortgage payment, you make a payment more frequently than the traditional monthly payment, but your payment is still based on the regular monthly amount.įor example, the payment amount for accelerated bi-weekly would be what the monthly payment amount would be, divided by 2, and paid 26 times each year. In Canada, the two main accelerated mortgage payment frequencies are accelerated bi-weekly and accelerated weekly. This means that increasing it will permanently affect your future payments, and it might not be possible to decrease it in the future. Some lenders might only allow you to increase your regular mortgage payment amount. Instead, it will still be $1,500, unless you decide to make another extra payment. For example, if you double up your RBC mortgage payment from $1,500 to $3,000, you’re not required to make a $3,000 mortgage payment the next month. In most cases, the “increase your mortgage” feature does not affect your original mortgage payment amount. Going over this limit will cause mortgage penalties to apply. ![]() You can, however, make a one-time prepayment by using your annual 10% prepayment allowance. You can’t make an extra mortgage payment of over $1,500 in a given month, even if you didn’t make an extra payment the previous month. In other words, if your monthly mortgage payment is $1,500 with RBC, then you can make an extra payment of between $100 to $1,500 every month. You can also "Double Up" your regular mortgage payment, which allows you to prepay between $100 up to your regular mortgage payment amount, with this amount going directly against your mortgage's principal balance. For example, RBC allows you to make extra payments, as a mortgage prepayment, equal to 10% of your original mortgage principal amount every year. ![]() Making a lump sum payment 5 years into your loan could save you $5,000 more in interest than making a lump sum payment after 10 years.Not all lenders allow you to make extra mortgage payments, and they may also limit the amount of extra payments that you can make each year. The following table uses a lump sum of $1,000. The longer answer is that it is most helpful to make a lump sum repayment when you can afford to without injuring your emergency savings, and when your financial institution will not charge you a fee to do so. The short answer is that making a lump sum repayment as early as possible into the life of your loan will make the greatest difference to reducing the interest you pay on your loan. Make sure you check whether the features of a home loan include the facility to make lump sum repayments, before signing up for the long haul. You can enter the specific loan amount you are looking for in our home loan calculators and our comparison of home loans on the market.
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