Friday, August 14, 2009

What do they mean by that ?

Here's our next entry: What do they mean by "acceleration" ?

According to our mortgage broker reference Marshall Spencer AMP, Mortgage Broker License # M08000817, acceleration is an expression usually used when a person has chosen to repay their mortgage payment on a weekly or biweekly basis although it can apply to any repayment program. All mortgages are drawn up showing a requirement that payments are made on a monthly basis. Most lenders nowadays will allow the borrower to divide their monthly payment in half for biweekly payments or in quarters for weekly payments which means that in stead of paying 12 monthly payments in a 52 week year, a borrower is actually paying 26 biweekly payments or 52 weekly payments in that same period. This means paying the equivalent of 13 monthly instalments in the time period where you would have only paid 12 under normal circumstances.

Since you are paying an extra payment - without penalty - you will save money by paying the mortgage down faster.

You can also accelerate your mortgage repayment but leave you payments on a monthly basis. By taking advantage of privileges normally written in to the contract to allow you to pay an extra 15% or 20% or increase your normal monthly payment amount by 15% or 20% you can also accelerate the replayment of your debt and save interest in the long run.

1 comment:

Finance Information said...


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