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Accelerated Mortgage Formula:
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The Accelerated Mortgage Calculator helps Canadian homeowners calculate their mortgage payments using the accelerated payment formula. This approach allows for faster principal reduction and interest savings over the life of the mortgage.
The calculator uses the accelerated mortgage formula:
Where:
Explanation: This formula calculates the fixed monthly payment required to pay off a mortgage over a specified term, accounting for both principal and interest components.
Details: Accelerated mortgage payments can significantly reduce the total interest paid over the life of the mortgage and shorten the amortization period, leading to substantial long-term savings.
Tips: Enter the principal amount in CAD, monthly interest rate as a decimal (e.g., 0.00417 for 5% annual rate), and the total number of monthly payments. All values must be positive numbers.
Q1: What is an accelerated mortgage payment?
A: An accelerated mortgage payment is a payment schedule that increases the frequency or amount of payments, resulting in faster principal reduction and interest savings.
Q2: How much can I save with accelerated payments?
A: Savings depend on your mortgage amount, interest rate, and term. Typically, accelerated payments can save thousands in interest and reduce amortization by several years.
Q3: Are there any penalties for accelerated payments?
A: Some mortgages have prepayment penalties. Check your mortgage agreement for specific terms regarding accelerated payments and prepayment privileges.
Q4: What's the difference between accelerated bi-weekly and monthly?
A: Accelerated bi-weekly payments result in 26 payments per year (equivalent to 13 monthly payments), while regular monthly payments total 12 per year.
Q5: Can I switch to accelerated payments mid-term?
A: Most lenders allow switching to accelerated payments, but you should confirm with your lender and understand any associated fees or conditions.