When it comes to shopping for a mortgage and figuring out your best options, the Internet is an amazing tool. Most banks have online mortgage calculators that help determine how big a mortgage you will qualify for, as well as how much interest you will pay.
The information below shows one example calculated on the Royal Bank’s website (rbcroyalbank.com /mortgages), based on a house priced at $375,000 with a 25-per-cent down payment of $93,750 and an interest rate of 6 per cent.
Monthly payments of $1,799.46 would pay off the debt in 25 years, at a total interest cost of $258,585. That’s in addition to the amount borrowed, meaning the $375,000 house would actually cost $633,585.
But an accelerated mortgage (slightly higher payments that result in an extra month’s payment each year) shortens the life of the mortgage. So if you change that same mortgage to make accelerated weekly payments of $449.87, it would be paid off in just under 21 years at a total interest cost of $208,522.
Do the math and the accelerated plan saves just more than $50,000 in interest — enough for a new car and renovations.