Know Your Options
Determining your payment frequency type is essential when solidifying your mortgage plans.
Knowing all of your options can have a major impact on your long term payment strategy and the overall cost of your mortgage.
This is when hiring a mortgage broker that you can trust comes into play.
Payment Frequency Types
There are 6 frequency payment types available to prospective home buyers:
Depending on which plan you choose, there are pros and cons to consider.
In short, the accelerated plans will actually save you money in the long run while the more traditional plans will have lower payments but will take the entire amortization period to pay off and will cost you more in interest.
Accelerated schedules involve adding an extra month into your payment schedule each year – this means that over a 12 month period, you would divide and spread an extra month’s worth of a mortgage payment across the 12 months of your payments.
In the short term, this approach will slightly increase your payment amount each time – however, in the long run you benefit from paying off your mortgage sooner and with significant interest savings to boot.
Below you can see the breakdown of a scenario where a $600,000 mortgage is being purchased and how the different payment frequencies affect the overall cost of your mortgage.
As you can see, there’s nearly $20,000 in savings to be had at the end of your term if you’re able to handle one of the accelerated payment plans.
At the end of the day, I’m here to help you figure out the payment strategy that is best for you by showing you all of your options.
One of the biggest benefits for hiring a mortgage broker is that you get tailored service specific to your financial needs.
If you have any questions regarding closing costs, or anything relating to mortgages, feel free to give me a call and I’ll gladly help wherever I can.