Amortization Schedule with the Canadian Mortgage App
Do you understand the difference between your mortgage term and amortization? Do you know how to read a mortgage amortization schedule? Let’s look at how the Canadian Mortgage App makes those things much more accessible.
What is a Mortgage Amortization?
You may have heard of the term “amortization schedule,” but do you know what “amortization” means? Many people get their mortgage terms and amortization mixed up. While both measure a length of time, the length of time they measure differs.
With a mortgage term, it’s looking at the length of time the terms and conditions of your mortgage are in place. In Canada, a five-year mortgage term is the most popular. This is how long you lock in a fixed rate or the discount off the prime rate if you are taking a variable rate.
With amortization, it’s the length of time it takes you to pay off your mortgage in full. Typically, this is 25 or 30 years. You’re limited to 25 years if you put less than 20% down on a property. If you’re putting 20% or more down, you can stretch the amortization to 30 years with a prime lender. A longer amortization makes your payments more affordable but costs you more in mortgage interest.
Now that you better understand amortization let’s look at the amortization schedule.
When you sign up for a mortgage, you are required to sign a bunch of forms. Probably the most useful of these forms is the amortization schedule.
The amortization schedule provides a breakdown of how much you’ll pay over the term of your mortgage. For example, if you choose a five-year mortgage term, it will show a summary of the payments over five years.
You’ll see various helpful amounts. How much in total you’ll pay over the five years? How much of that is interest, and how much is the principal? There’s also a handy table that further breaks that down. Of each payment, you can see how much of it goes towards interest and how much towards the principal.
Mortgage payments are front-loaded because more of your money goes towards interest at the beginning. As you pay down your mortgage, less and less money goes towards interest until it’s fully paid off.
How the Canadian Mortgage App Can Help
The Canadian Mortgage App lets you see your mortgage amortization in a whole new way.
With the amortization schedule feature of the Canadian Mortgage App, you can bring your amortization schedule to life. You can see it displayed as a graph. You can even choose different payment frequencies to see how it would affect the amortization schedule. Here’s a training video from Ben where he goes over this handy feature.
What are you waiting for? Download the Canadian Mortgage App today to try it out.