Tag: FCAC

How Can Mortgage Prepayments Save You Thousands On Your Mortgage

How Can Mortgage Prepayments Save You Thousands On Your Mortgage?How to save thousands of dollars on your home mortgage? Mortgage prepayments can save you thousands of dollars over the years! If you’re unsure ask your lender about your eligibility, you are allowed or not. A prepayment or lump sum is an amount that you pay extra to your regular payments to reduce your liability or pay off the debt balance. It’s like getting down your interest rates over your payment for the term by making your payments earlier. Increased mortgage payment vs lump sum is nearly same and depends on your circumstances and or financial condition, whatever you consider, should be wise and beneficial. How can mortgage prepayments save you thousands on your mortgage? Following is an article especially selected from official website of Financial Consumer Agency of Canada for your consideration and better results.

Mortgage prepayments can save you thousands on your mortgage—but check first

Making prepayments on your mortgage could save you thousands of dollars over the years—as long as your mortgage lender allows them.

A mortgage prepayment is any amount you pay in addition to your regular payments. This can include increasing the amount of your regular mortgage payments or making a lump-sum payment to reduce or pay off your mortgage balance.

The sooner you can make prepayments, the less interest you will pay over the long term.

For example, consider a 25-year mortgage of $150,000 with a 5.45% interest rate. Assuming the interest rate remains the same over the life of the mortgage, the monthly payments would be about $911. Increasing the payments by $50 per month would pay off the mortgage two years sooner and save $14,000 in interest.

A one-time lump-sum payment of $15,000 in the second year of that same mortgage would result in paying off the mortgage more than four years earlier and saving over $33,000 in interest.

Check your mortgage agreement first, because not all mortgages have prepayment privileges. A closed mortgage may require you to pay a penalty or fee for any prepayment.

Federally regulated financial institutions, such as banks, must show your prepayment options in an information box at the beginning of your mortgage agreement. It will specify whether you can make prepayments, when you can do so, plus other related terms and conditions. Read your mortgage agreement carefully, and before signing ask the lender to explain anything that you don’t understand.

When shopping for a mortgage, ask the following questions:

  • How much can I prepay without penalty or fee?
  • Is there a minimum amount for a prepayment?
  • When can I make prepayments?
  • Are there any conditions or limitations?
  • If there are fees or penalties, how much are they, and how are they calculated?

The Financial Consumer Agency of Canada has more information on this topic at itpaystoknow.gc.ca.

Source: Financial Consumer Agency of Canada (FCAC)
Date modified: 2015-06-25

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How To Learn The Total Costs Of Homeownership? FCAC Explained

How To Learn The Total Costs Of Home Ownership? Mortgage Cost Canada An OverviewWhen it comes to determine costs associated with homeownership, you’re mostly got an impression about how much your monthly mortgage payment will be when you take out a mortgage to buy a home. However, there are some hidden costs of homeownership that will add up in your monthly cost soon in the process. How much does it cost to own a house? Buying a home is an expensive that require you to find out your affordability, and or creditworthiness prior to taking out the mortgage loan. Here in this article you will find; how to learn the total costs of home ownership? Following is an overview on taking out and determine the true cost associated with the mortgage to buy a home in Canada, especially selected from Financial Consumer Agency of Canada that will help you in learning about the total costs associated to become a home owner; it’s brief and to the point:

Half of Canadians who plan to purchase a home think they will only need to cover the down payment to move in. The “closing costs” however, can add as much as another four percent of the total purchase price of the home

Closing costs can include:

  • legal or notary fees
  • land registration fees
  • municipal levies
  • surveys
  • appraisal fees
  • home inspection fees
  • utility hook-ups
  • title insurance
  • property tax and utility adjustments.

Additionally, if your down payment is less than 20 percent of the price, you will have to pay for mortgage default insurance plus the provincial sales tax charged on it.

For a $300,000 home, closing costs could range from $4,500 to $12,000. Other up-front payments that may be required include moving expenses and the real estate costs for selling your old home. Even redirecting your mail is an added expense.

A complete guide to the finances of home-buying is available on the website of the Financial Consumer Agency of Canada at ItPaysToKnow.gc.ca.

Source: Financial Consumer Agency of Canada (FCAC)
Date modified: 2015-06-30

How to save thousands of dollars in home financeing? There are various factors that can save you, where your real and total costs associated with your home ownership will determine your real savings, you may please consult your mortgage consultant to find one best deal for you. For more information and updates on “total costs of homeownership”, you may please go directly to the official website of Financial Consumer Agency of Canada (FCAC).

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