Mortgage payment options

Image result for mortgageThe average Canadian has to take out a mortgage in order to buy a house. Once the process is completed and you own your home, you will have to start making payments on your mortgage.

During the process, you will decide, with the help of your lender, which payment option to choose. The option you choose will determine how often and for how long you will pay. There are 5 different payment options: monthly, weekly, biweekly, accelerated biweekly or accelerated weekly.

Each option will affect your budget one way or another. As you continue reading, you will know all the information you need to choose the ideal form of payment for your financial situation.

Monthly payments

Monthly payments are the most direct and most of the time the most common. By choosing to make monthly payments, your mortgage payments will automatically be taken from your bank account under the same name each month. This means that you will make 12 equal payments on your mortgage per year.

Weekly payments

If you choose to make weekly payments, the money will be withdrawn from your account each week. 52 weeks a year. Monthly payments are calculated by dividing by 52 your annual mortgage payment. If this is $ 15,000, your weekly payments will be approximately $ 288.

Biweekly payments

Biweekly payments indicate that you will make payments every 2 weeks. These are calculated by dividing your annual mortgage payment by 26. There are 26 periods of 2 weeks per year. If your annual payment is $ 15,000, your bi-weekly payments will be approximately $ 567.

Bi-weekly accelerated payments

Accelerated payments will allow you to pay off your mortgage faster and save on interest. Accelerated bi-weekly payments might look like regular bi-weekly payments, but they are not. Here is how they work:

You will pay off your monthly mortgage every 2 weeks. With an annual mortgage of $ 15,000, your monthly payments will be $ 1,250. You will make payments of $ 625 every 2 weeks, which adds up to $ 16,250 after one year instead of $ 15,000 ($ 625 X 26 = $ 16,250). By choosing this option, you will repay $ 1,250 more on your mortgage annually.

Accelerated weekly payments

Accelerated weekly payments

The calculation of accelerated weekly payments is very similar to that of accelerated bi-weekly payments. Your monthly mortgage payment of $ 1,250 is here divided into 4 and then multiplied by 52, which means that you will repay $ 16,250 on your mortgage annually. The only difference is that you will make weekly payments rather than biweekly.

What is the benefit of paying off your mortgage with accelerated payments?

What is the benefit of paying off your mortgage with accelerated payments?

You might not have the finances to make accelerated mortgage payments, but if it’s financially possible for you, you’ll benefit.

  • Shorter amortization period You can repay your mortgage faster than the average.
  • You will create real estate equity more quickly. Real Estate Equity is the part of your home that you own after you start paying off your mortgage. The sooner you repay your mortgage, the sooner you will have equity.
  • Save on interest. This is probably the main reason for choosing to make accelerated payments. The faster you pay off your mortgage and the less interest you will have to add, leaving you more of your income for what really matters.

Mortgage payment options: which one is the best?

The most efficient and cost effective way is either with accelerated bi-weekly payments or accelerated weekly payments. If you choose one of these options, not only will you pay off your mortgage faster, but you’ll also save a few thousand dollars in interest.

You must know what lifestyle you want to maintain when paying your mortgage and your cash flow. If you think that accelerated payments would be too heavy for your budget, maybe this is not the ideal option for you.

Need a second opinion?

If you are thinking of buying a home or just need more information about mortgage options and solutions, do not hesitate to contact us!

What types of insurance exist

How-work-the-insurance

All our lives we are full of risks that compromise both our physical and economic well-being. With the passage of time, fortunately, we acquire more goods that are useful for our life: we buy a car, a house, and we also have children and start investing in a business. But how to protect all these assets from the risks out there?

Surely more than once you have thought about how important it is to plan for the future and that, within that planning, you must be prepared for any eventuality. The factors of life change suddenly and from one moment to another, are unexpected and can bring economic problems.

Not for nothing, insurance was invented. Do you sound? Sure you think that they are not the best option to protect a heritage, because perhaps it has happened to you that when you consult something in the bank, you find out that you have insurance for this and for that when you did not even know that you had accepted them.

But, the insurance goes further. It is a contract through which an established amount of money known as “premium” is paid to an insurer, so that you or your beneficiaries receive compensation in case of suffering an unexpected event such as an accident. automobile, a major medical expense or even death.

The insurance and the amounts they cover must be previously established in a document known as the “policy”. As mentioned above, it is common for insurance to be considered an unnecessary expense because in many cases they appear due to lack of clarity in the contracts we acquire, but in reality they are an investment.

The insurances are designed to face any type of economic affectations derived from an eventuality. On several occasions we have talked about having an emergency fund to deal with unfortunate events such as illness or an accident. In that sense, if you do not have an emergency fund, insurance could be the solution.

Why would it be important? Simply because the fact of having contracted insurance is cheaper than solving the unexpected of a milestone. Everything you imagine is possible to ensure: life, a home, health, education of children, a car, a business, funeral expenses and even some technological devices.

To contract any type of insurance it is essential that you know yourself: what are your risks and on what things can fall? But also, it’s worth it to be aware that insurance is essentially for you and your loved ones. If you have children it is worth having insurance, but if you do not have a car, for example, then you do not need to insure anything.

Take into account that over time your needs change and depending on the stage of life in which you find you may or may not need insurance. Suppose you are already some years old then, it would be ideal to have life insurance to prevent any eventuality. The recommendation is that you always, without exception, have insurance for major medical expenses.

Before hiring insurance

The recommendation prior to contracting an insurance is to identify the risks to which you are exposed and to which your family is also, it is also important that you analyze the different options that financial institutions give you so much to compare costs and benefits of each insurance .

In addition, specialists recommend that when filling out the application for insurance, it must be very precise . You must be careful not to falsify data or put misleading names that could motivate the cancellation of the policy and, consequently, make it impossible to collect the insurance against any event.

It is also important that you carefully read the general conditions of insurance contracting. It is good to have no doubts and verify that the insurer and the insurance agent who are selling you the product you are about to hire are duly authorized by the competent authority.

We all have different needs and we are exposed to different circumstances, and that is why you should have insurance that protects you from any eventuality. For example, if you have a car, do not be one of those people who run away when they collide, it is better to assume responsibility, and insurance can help you.

Know the types of insurance

Life insurances

<strong>Major medical expenses insurance</strong>

Life insurance is designed to cover the costs of an illness or death. They also protect our loved ones from an incident. Within life insurance there is one for each situation. But, mainly life insurance is considered for events such as death in which the sum insured is delivered to your beneficiaries.

There are also dots insurance that are like a double protection. If you die, the sum insured is given to your beneficiaries, but if you survive at the end of the period agreed in the policy, the company will deliver the money directly to you.

On the other hand, there are also educational insurance that have the function of providing protection so that at the end of the agreed period a fixed amount is given to your children so that they can conclude their studies mainly at the higher level. It is not the same as an educational trust because the latter has the function of generating more returns with the help of a fiduciary, who operates, captures and protects the resources of the fund.

Last, but not least, are the pension insurance that consists of the delivery of life annuity money that will give you for life if you are a worker and you retire. If you die, the money is delivered to your beneficiaries. In this type there are two variants: those of the private initiative hired by the employee, and those of social security to which the worker has access by law.

Some of the advantages of life insurance are the guarantee of a patrimony for the beneficiaries in case the insured is missing, the protection in case of accident, illness or incapacity for work, the future profitability that can be obtained and its use as a short, medium and long term savings tool.

Major medical expenses insurance

Image result for medical insuranceMedical services are highly expensive and in view of this reality, it is recommended to have insurance for major medical expenses in order to meet the cost of a possible accident or illness, including medical, hospital and complementary services.

In insurance for major medical expenses, the cost is borne by the insured, that is, whoever contracts the policy chooses hospitals, doctors and laboratories that he wishes to hire to receive care. However, only the services that are integrated to the insurers with which you have an agreement can be chosen.

There are also the insurance of minor medical expenses that are preventive in nature and, where appropriate, the expense is managed by the insurer hired, defining who will provide medical care when necessary. This type of insurance covers consultations with first-contact physicians, specialists and laboratory tests stipulated in a policy.

Home insurance

Image result for home insuranceIn order to keep our house or apartment protected from eventualities such as fires, earthquakes, floods or robberies, there are insurances for the house. With this you can protect both the physical structure of the house and the contents of it as far as furniture and accessories are concerned.

The rented homes can also be insured and, as if that were not enough, this type of insurance also provides the possibility of contracting a civil responsibility coverage that responds economically to damages to other properties in the event of an accident. For example, if an earthquake occurs and your house collapses on another, your property and that of your neighbor is protected.

In addition, there is also coverage for robbery with violence and assault on the home, so that if this happens, both the decoration and furniture and appliances are protected and easier to replace.

Car insurance

Image result for car insuranceIt is not easy to make a car and when you buy it, it is an investment that you have to protect. That is why insurers developed auto insurance . When you have one, you can rest assured that your insurer will respond in case of an assault, accident or total loss.

There are different types of coverage, but it is essential that your insurance has the protection of people traveling with you in case of an accident and also, that covers partial or total material damage that the car could suffer after being involved in an accident.

Also, in case of theft, insurance can cover the amount insured by the vehicle, or they can help you cover the expenses that you could cause to third parties on your person or your assets derived from an accident.

Finally, and at best, car insurance also provides legal assistance or technical assistance in case your car should fail even in the middle of nowhere. That is why it is essential to have insurance if you have a car.

Remember that insurance includes payments, but these will sooner or later become an investment. If you hire a policy, you must fill out all the data correctly, from the name of your beneficiaries until you know what the deductible amounts are for each event. Remember to go to insurers legally constituted and with the best prices.

Or, should any other eventuality arise, consider hiring a loan to deal with the problems that may arise.