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Mortgage Prepayment
Your Mortgage and Prepayment Options
Thank you for choosing Synergy Credit Union for your mortgage. When you signed with us, you received legal documents outlining your prepayment options. We understand life can get busy, and some terms might be confusing. Below is a chart explaining your options based on your mortgage, including ways to pay it down faster. Feel free to reach out with any questions or for advice tailored to your situation—we're here to help.
Personal Mortgages
| Mortgage | Downpayment | Rate |
Prepayment option
(amount you can pay down on your mortgage per year)
|
Prepayment penalty
(if prepayment is greater than specified) see below
|
| Simplicity mortgage | Insured (5-19%) | Fixed | 20% per year of the total mortgage amount | A or B (whichever is the greatest) |
| Conventional (20%) | Fixed | |||
| Conventional (20%) | Variable | A | ||
| Super Mortgage | Insured (5-19%) | Fixed | 20% per year of the total mortgage amount | A or B (whichever is the greatest) |
| Conventional (20%) | Fixed | |||
| Conventional (20%) | Variable | Can paydown the mortgage as quickly as possible | None | |
| Open Mortgage | Conventional (20%) | Fixed or variable | Can paydown the mortgage as quickly as possible | None |
Maximize Your Mortgage Payoff: Simple Strategies and Key Considerations
Embark on a journey to pay off your mortgage faster and smarter. Our straightforward tips empower you to take control of your mortgage, ensuring a smoother path to financial freedom.
Choose Your Payment Frequency
Tailor your mortgage payments to align with your lifestyle. Opt for weekly, biweekly, semi-monthly, or monthly payments. Take it a step further with accelerated weekly payments – dividing your monthly payment by four results in 52 weekly payments a year, essentially making an extra monthly payment and reducing your overall interest.
Boost Your Payments with Extra Contributions
Unlock the potential to prepay up to 20% of your original mortgage amount annually. Some mortgages offer even more flexibility (refer to the chart for details). Let us know if you wish to contribute extra funds – we'll direct them towards your principal, saving you significant interest costs and shortening your mortgage term.
Accelerated payment example:
Imagine you have a $100,000 mortgage with a 5-year fixed term and bi-weekly payments.
By adding just $50 to each bi-weekly payment, you can pay off your mortgage 3 years and 5 months earlier, saving thousands in interest over the term.
Stay Informed about Penalties
While optimizing your payments, it's essential to be aware of potential penalties:
A. Three-Month Interest Penalty: Should you exceed the annual prepayment limit, you might face a penalty equal to three months' interest. For instance, if your remaining mortgage amount is $100,000, the penalty would be approximately $1,250.
B. Interest Rate Differential Penalty: Going beyond the allowed limits may trigger an interest rate differential penalty. Using the example criteria below – with a remaining mortgage amount of $100,000 – this penalty could amount to approximately $3,999.99. This is calculated based on the difference between your current mortgage rate and our posted rate, factoring in the remaining months on your term.
Example scenario:
| Current mortgage rate | 5.00% |
| Months remaining on term | 24 |
| Current interest rate on 2-year term | 3.00% |
| Interest rate differential | 2.00% |
Example calculations:
| Multiply the mortgage balance by the rate differential (this will determine the rate for 1 year) | $100,000 x 2.00% = $2,000 |
| Divide the 1-year amount by 12 (to get the amount for 1 month) | $2,000/12 = $166.67 |
| Multiply the monthly amount by number of months remaining on the term | $166.67 x 24 = $3,999.99 |
| Total interest rate differential penalty (if applicable) | $3,999.99 |