With inflation at an all time high, Canadians are feeling the pinch!

Without a doubt, while we get through these inflated times,  this is going to become a time of prudent budgeting where we push extras aside for a while and put essentials to the top of our needs.

If you are paying your mortgage using an accelerated frequency (biweekly, or weekly), one way to free up some monthly cashflow is to consider remove the acceleration and choose regular payment in line with your frequency.

If you are accelerating your payment, you are in essence making one extra “monthly” payment to your mortgage per year. By changing your payment from accelerated to regular you will no longer be putting the extra on your mortgage and putting that cash back into your pocket.

Mortgage balance is: $300,000
Biweekly accelerated payment is: $749
Bi weekly regular payment is: $691

Back in your pocket per month: $126.00
(based on 26 pay periods per year, divided by 12 months)

Understand that this strategy is to reduce your mortgage principle and interest payment, and create more monthly cash flow. It will not accelerate the reduction of your mortgage total which will affect the amount of interest you pay overall with your mortgage. By continuing with accelerated payments, you effectively reduce your amortization (the time it takes to pay off your mortgage), which reduces the amount of interest you pay over the lifetime of your mortgage.

Everyone has different goals with their mortgage at different times. There is no one size fits all. Do what serves your needs and goals best through the options you have with your mortgage provider.

Mortgage Sisters West is an independent brokerage franchised with Mortgage Architects. We serve all of Alberta, with a focus on  Edmonton, Sherwood Park, St. Albert, Fort Saskatchewan, Spruce Grove, Stony Plain, Beaumont, Leduc and surrounding areas!