How To Determine Your Mortgage Payments

When you head into the property market to purchase a property, you will most likely have to get a mortgage from a bank. Once you are approved for this mortgage, regular payments will be required until the mortgage’s total settlement amount has been paid off. However, different aspects will determine the level of your regular payments:

• Mortgage Rate: In simple terms, the higher the interest rate, the more expensive your payments will be. A mortgage rate can differ significantly depending on where you obtain your mortgage, as well as the current economic scenario.
• Mortgage Amount: Of course, this is obvious; the more you borrow, the higher your payments will be. On top of this, if you put down less than 20% for your deposit in Canada, you will have to pay for CMHC insurance.
• Payment frequency: The more payments you make in a year, the smaller your payments will be.
• Amortization Period: In simple terms, this is the length of your mortgage, and the longer it is, the smaller your regular payments will be. However, this will also result in a higher overall repayment amount.

A monthly mortgage payment will come out of your bank account on a set day each month. This means that you will make 12 payments per year. This is the most conventional mortgage frequency set up.

Bi-weekly mortgage payment comes out of your bank account every 2 weeks. This means you will make 26 payments per year. This can be more beneficial for individuals paid on a bi-weekly cycle rather than paid weekly or monthly.

As the name states, this would involve paying for your mortgage weekly. This is calculated by taking your monthly mortgage, multiplying by 12 and then dividing by 52. This is beneficial for those who may be paid weekly or wish to spread out the payments as much as possible.