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Buyer Tips
REPAYMENT OPTIONS
How you pay your mortgage has a dramatic effect on the amount of interest you pay…
AMORTIZATION:
The gradual repayment of a debt by means of partial payments on the principal at regular intervals. The amortization period is the time required to repay the debt completely.
The amortization period has a dramatic effect on the amount of interest paid over the length of the mortgage.
Consider the following example:
$150,000 mortgage with an interest rate of 8.00%*
Amortization
years |
Monthly
Payments |
Savings
in Interest |
25 |
$1144.82 |
|
20 |
$1242.54 |
$45,236.40 |
15 |
$1,422.23 |
$87,444.60 |
* The example above assumes the interest rate will remain constant through out the whole amortization period.
PAYMENT SCHEDULES:
Most mortgages have very flexible payment alternatives. Weekly, bi-weekly, or monthly payments are most common. These choices also have a great effect on the overall interest payments.
Consider the following example:
$150,000 mortgage with an interest rate of 8.00%* over a 5 year term.
|
Payment |
Remaining balance at end of term |
| Weekly |
$ 286.21 |
$130,987.21 |
| Bi-weekly |
$ 572.41 |
$131,057.47 |
| Monthly |
$ 1,144.82 |
$138,203.66 |
* The example above assumes the interest rate will remain constant through out the whole amortization period.
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