Darrel Fedor- Associate Broker
Call Direct 403-630-2165
Client Focused-Results Driven
Shave years off your mortgage
Whether you are buying your first home, or have been making mortgage payments for years, you may be thinking about reducing this obligation, faster. In fact, changing your term, the payment amount and even making lump sum payments could pay down your mortgage more quickly.
Reduce the amortization period
The amortization period is the length over which the debt is carried.
By reducing this time period, from 25 years to 15 years, you will save
thousands in interest. The following chart shows these savings.
| Interest rate | *Monthly payment | *Monthly payment | difference | interest |
| (per annum) | 15-year | 25-year | savings | |
| 7% | $893.26 | $700.43 | $192.83 | $49,332.18 |
| 8% | $948.16 | $763.21 | $184.95 | $58,299.80 |
*Compounded half-yearly, not in advance.
**Interest savings over the life of the mortgage, assuming constant interest
rate throughout amortization period.
Based on figures obtained from RBC Royal Bank
Make lump-sum pre-payments
Many lending institutions allow for lump sum payments. On the anniversary
date you can make a payment of a specified amount towards the mortgage.
You may also be able to double up on regular payments on any payment date.
These double-up payments are applied to the principal.
Increase the amount of your payments
Any additional amount you can make on your principal reduces the amount
of interest. Check with your lender when you have additional cash reserves.
