Jean Richer & Irene Bilinski
Bilingual Sales Representatives

Mortgage Payments

There are many different mortgages and many different payment options. The most popular current mortgage payment choices include:

The “Traditional” Monthly Mortgage Payment
Twelve equal payments are made each month for the length of the mortgage term, based on the amortization period. For decades, this was the only option available for mortgage holders, no matter what type of real estate they purchased.

Accelerated Mortgage Payments
Over the last decade, mortgage holders have been given the option of accelerated payment plans. Making a payment every two weeks, instead of once a month, means that the equivalent of an extra month’s payment is made each year (26 divided by 2 equals 13). Over a fifteen year amortization period, for example, the mortgage will be paid almost two years early and with a consequent reduction in the amount of interest generated. Another effect of making more frequent mortgage payments (including weekly ones) is that the principal is paid more quickly, so that the amount of interest accruing each month is less. Over the years of the amortization period, it can add up to quite a saving.

Principal Only Payments
Most recently, it has become important to ensure that a principal only payment is a of a mortgage agreement. When negotiating with your chosen Ottawa mortgage specialist, insist on a principal only payment component in the mortgage. This allows the borrower to pay down an extra percentage of the mortgage each year without incurring any early payment penalties.

Some lenders will allow it on the “anniversary” of the mortgage, while others will permit a payment to be made each month. This is one method by which borrowers who can only meet income/debt ratios through an extra long amortization period can pay down their mortgage more quickly. The principal only payment goes directly against the amount owed, and not towards interest. Even a $100 a month or a $1,000 a year, especially at the beginning of the mortgage when most of the regular payments go toward interest, will make a big difference. Your Ottawa mortgages expert should be able to help you get the most suitable payment plan.