Choose an Amortization Period, that makes sense for you
Choosing a longer amortization period can get you into your dream home sooner than choosing a standard or shorter period. When you apply for a mortgage, lenders calculate the maximumregular payment you can afford. They then use that amount to calculate the maximum amount they will lend to you for your mortgage.
As a shorter amortization period results in higher regular payments, a longer amortization period reduces the amount of your regular principal and interest payment by spreading your payments over a longer period of time. So you could qualify for a higher mortgage amount than you originally anticipated. Or you could qualify for your mortgage sooner than you had planned. Either way, you end up in your dream home sooner than you thought possible.
Get your dream home sooner with a longer amortization. Regular payments are less with a longer amortization. Again, this option is not for everyone. While a longer amortization period will appeal to many people because the regular mortgage payments can be comparable or even lower than paying rent, it does mean that more interest will be paid over the life of the mortgage.Regardless of which amortization period you select when you originally apply for your mortgage, it does not mean you have to stay with that period throughout the life of your mortgage. You can always choose to shorten the amortization period and save on interest costs by choosing an accelerated payment option, making extra payments when you can, such as a Double Up annual lump sum principal prepayment.
You should review your options at each renewal to shorten your amortization and pay off your mortgage faster. It also makes good financial sense for clients to re-evaluate their amortization strategy every time their mortgage comes up for renewal.
Then, as you advance in your career and begin to earn a better salary over time, you can simply increase the amount of your regular payments by as much as 10% once each year. All these prepayment features will take years off your amortization period, and save you money on interest.
