Real Estate

Mortgage payments

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  • Jun 19th, 2016 6:53 pm
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[OP]
Deal Addict
Dec 17, 2006
1712 posts
222 upvotes

Mortgage payments

I am about to purchase a house and had a question regarding mortgage payments. I currently have a pre-approved mortgage with TD.

I obviously want to pay my mortgage up faster and TD has offered me a bi-weekly or monthly plan.

I am thinking a bi-weekly plan would lower my total overall payments because the first payment of every month is applied to the principal and interest. However, after looking on google I am getting mixed reviews saying this is NOT the case.

What are your guys's opinions and are there any other options I can do to make more payments thus, lowering my principal and interest balance?

Thanks RFD!
9 replies
Jr. Member
Dec 25, 2005
157 posts
71 upvotes
Bi-weekly plans just allows you to get an extra payment in or so a year compared to monthly I believe. Just take advantage of your mortgage plan of paying extra towards your principal per year that you are allowed to, or if you have double up payment options etc...
Deal Addict
Jul 28, 2012
1025 posts
445 upvotes
Trois-Rivières, QC
Bi-weekly accelerated (or rapid bi-weekly) might be the option you are looking for. In the long term, it results in one extra monthly payment per year, because your yearly payment is divided by 24, but paid 26 times per year.
https://www.tdcanadatrust.com/planning/ ... faster.jsp

EDIT: Opting for bi-weekly payments (not accelerated) vs monthly payments has a minimal effect on the total time it takes to pay off the mortgage.
http://www.rbcroyalbank.com/mortgages/a ... dules.html

Also, check with your bank how interest is calculated and compounded. For each payment you make, there is always a principal and an interest portion. During the first years, the interest portion is much higher than the principal portion because your mortgage balance is high, but as you pay off the mortgage, the opposite will gradually happen.
Deal Expert
Aug 22, 2011
35632 posts
21691 upvotes
Center of Universe
Yearly lump sums, up to 15% of the principal and you'll be done in no time.
On top of the accelerated bi-weekly, you can also increase the amount by $100 or so.
Deal Expert
Oct 6, 2005
16599 posts
2315 upvotes
heat?? wrote: I am thinking a bi-weekly plan would lower my total overall payments because the first payment of every month is applied to the principal and interest. However, after looking on google I am getting mixed reviews saying this is NOT the case.
Just take a look at the amortization schedule - it's pretty clear which option is faster. Combine that with pre-payments and you should be able to cut 25% or 50%+ off your mortgage duration.
Sr. Member
Mar 4, 2010
522 posts
217 upvotes
Toronto
go with accelerated biweekly. not only does it pay off the mortgage faster, its also easier to budget against each paycheque. i have my mortgage accelerated biweekly and when my payroll deposit comes in, that portion automatically comes out same day.
Deal Addict
Feb 4, 2008
3135 posts
177 upvotes
Weekly is better than Biweekly,which is better than monthly. It would just be more sensible to have the payment made the day after you get paid. You always have the opportunity to make additional payments when you can.

Are you set on TD? There are other lenders that offer better prepayment privileges and less harsh penalties if you need to break our mortgage.
www.mortgagecalculatortoolkit.com

Do your mortgage math correctly!
Sr. Member
Mar 4, 2010
522 posts
217 upvotes
Toronto
sslinn wrote: Weekly is better than Biweekly,which is better than monthly. It would just be more sensible to have the payment made the day after you get paid. You always have the opportunity to make additional payments when you can.

Are you set on TD? There are other lenders that offer better prepayment privileges and less harsh penalties if you need to break our mortgage.
weekly and accelerated biweekly comes out to the same amortization schedule.

agreed, i dont think TD is all that great. find a place you can up your payments or make lots of additional payments
Deal Fanatic
User avatar
Feb 2, 2014
8889 posts
2543 upvotes
Toronto
heat?? wrote: I am about to purchase a house and had a question regarding mortgage payments. I currently have a pre-approved mortgage with TD.

I obviously want to pay my mortgage up faster and TD has offered me a bi-weekly or monthly plan.

I am thinking a bi-weekly plan would lower my total overall payments because the first payment of every month is applied to the principal and interest. However, after looking on google I am getting mixed reviews saying this is NOT the case.

What are your guys's opinions and are there any other options I can do to make more payments thus, lowering my principal and interest balance?

Thanks RFD!
ACCELERATED weekly or bi-weekly will pay off the mortgage faster than non-accelerated plans. The calculation is different, so the payments under accelerated is higher than non-accelerated. You can also make pre-payments to help payoff your mortgage faster.

Be aware though, all TD mortgages are collateral charges. This means you have to pay added costs if you ever want to leave them.
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative

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