Managing your mortgage
Learn how to pay down your Desjardins mortgage faster or in full, or in situations where you have to pay a mortgage prepayment penalty.
- Pay down your mortgage faster or in part
- Pay off your mortgage
- Move before the end of your mortgage term
- Payment holiday
- Mortgage glossary
Pay down your mortgage faster or in part
Here are a few tips and simple ways to fully benefit from the payment options set out in your Desjardins mortgage contract.
- Increase your payment frequency
- Increase your payment amount
- Prepay your mortgage
You can increase the frequency of your mortgage payments any time with no charge or penalty, under certain conditions. You'll be surprised when you realize how much you could save on interest costs.
Good to know
You can use the money you save to pay down the borrowed principal faster.
You can choose to make payments:
- every week
- every 2 weeks
- once a month
Good to know
If you receive regular income (salary, pension, etc.), you can time your mortgage payments as your money comes in. It's an easy way to manage your budget and, in many cases, save on interest.
You can pay down your mortgage faster by opting for accelerated payments, which amount to making one additional payment each year. By doing this, you'll reduce your amortization period by many years and save significantly on interest costs.
You can get these benefits by making payments weekly or every 2 weeks. Each year, you'll be making nearly the equivalent of one extra monthly payment, thereby paying down the principal faster.
Examples: payment methods (normal and accelerated)
The following table compares different types of payments for a $150,000 mortgage, amortized over 25 years (300 months), with a fixed rate of 4.99%1 for a 5-year term. See how accelerated payments save you thousands on interest costs and allow you to pay down your mortgage faster.
Use the Mortgage Payment Calculator to compare your own mortgage payments.
| Payment frequency | Payment amount | Interest saved (over the entire term)1 | Amortization |
|---|---|---|---|
| Monthly | $871.56 | $0 | 25 years |
| Weekly2 | $200.48 | $859 | 24 years and 11 months |
| Accelerated weekly3 | $217.89 | $18,928 | 21 years and 4 months |
| Every 2 weeks2 | $401.14 | $730 | 24 years and 11 months |
| Accelerated every 2 weeks3 | $435.78 | $18,722 | 21 years and 4 months |
- Rate in effect on March 28, 2014. Calculations are based on assumption that interest rate is fixed over the life of mortgage.
- Payment calculations are made by multiplying the monthly payment amount by 12 and then dividing it by 52 (for weekly payments) or by 26 (for payments every 2 weeks).
- Accelerated payment calculations are made by dividing the monthly payment amount by 4 (for weekly frequency) or by 2 (for "every 2 weeks" frequency).
All our closed mortgages (fixed or variable rate) allow you to increase the amount of your regular periodic payments with no charge or penalty.
Conditions
Frequency permitted
Once per calendar year
Maximum permitted with no charge or penalty
You can prepay up to double the amount in your contract over the term of your mortgage.
You may then reduce the amount as stipulated in your contract.
Minimum increase or payment
No minimum amount
Advantages
Additional amounts are applied directly against the balance of your mortgage, which cuts down on the life of the mortgage and interest costs.
Example
- Payment amount set out in contract: $500 per month.
- You can increase the amount once per calendar year, up to $1,000, over the term of the mortgage.
N.B.: If you wish, you can then reduce your payment down to the initial amount, that is $500.
Good to know
Additional payments are applied in full against the balance of your mortgage.
Do you have a mortgage and want to pay it down faster? You can make a prepayment with no charge or penalty at your caisse or on AccèsD. By doing this, you can reduce your amortization period by many years.
Conditions
Frequency permitted
One or more partial prepayments per calendar year, without charge or penalty
Maximum permitted with no charge or penalty (closed mortgage)
Up to 15% of the initial mortgage amount (non-cumulative from year to year)
Minimum increase or payment
$100
Advantages
Additional payments are applied directly against the balance of your mortgage, which cuts down on the life of the mortgage and interest costs.
Example
The caisse loaned you $200,000 and you still have a balance of $100,000.
You may make, with no charge or penalty, one or more prepayments of at least $100, up to a maximum of $30,000 per calendar year (that is, 15% of $200,000).
Good to know
- When you renew your mortgage and the rates are lower, keep the payments the same or increase them. They will be applied directly against the balance of your mortgage to pay it down faster.
- Monitor your prepayments closely to ensure you don't go over the limit of 15% of your initial mortgage amount.
If you want to make a partial prepayment that exceeds the amount you can prepay with no charge or penalty, you may do so at any time, if you pay a prepayment charge (calculated as follows):
Reduced Variable-Rate Mortgage, Protected Variable-Rate Mortgage, and Yearly Rate Resetter Mortgage
The penalty is 3 months' interest calculated on the prepayment amount, at the mortgage rate.
Closed Fixed-Rate Mortgage
The penalty is the higher of the following:
- 3 months' interest calculated on the prepayment amount, at the mortgage rate
or - the interest rate differential (IRD)
The following table illustrates how the penalty is calculated for partial prepayments exceeding 15% of the initial mortgage amount, depending on the type of mortgage.
| Initial amount | $200,000 |
| Balance | $100,000 |
| Interest rate | 6% |
| Remaining term | 2 years and 10 days, or 740 days |
| Reduced Variable-Rate Mortgage, Protected Variable-Rate Mortgage, and Yearly Rate Resetter Mortgage | Closed Fixed-Rate Mortgage | |
|---|---|---|
| Maximum prepayment allowed without penalty (15%) | $30,000 per year ($200,000 x 15%) | $30,000 per year ($200,000 x 15%) |
| Partial prepayment you want to make | $40,000 | $40,000 |
| Amount of partial prepayment exceeding the 15% limit | $10,000 ($40,000 - $30,000) | $10,000 ($40,000 - $30,000) |
| Penalty calculation based on 3 months' interest4 | Interest costs for 1 year: (excess payment amount) x (mortgage rate)
= $10,000 x 6% = $600 Interest costs for 3 months: $600 ÷ 12 x 3 = $150 penalty |
Interest costs for 1 year: (excess payment amount) x (mortgage rate)
= $10,000 x 6% = $600 Interest costs for 3 months: $600 ÷ 12 x 3 = $150 penalty |
| Posted interest rate corresponding to the remaining term of the mortgage5 | N/A | 5% |
| Calculation based on interest rate differential (IRD) | N/A | a) Difference in interest rate: (mortgage rate) - (posted rate) = 6%
- 5% = 1% b) Penalty: (excess payment amount) x (difference in interest rate) ÷ (365 days) x (remaining term) = $10,000 x 1% ÷ 365 days x 740 days = $202.74 penalty |
| Penalty | $150 | The higher of the 2 amounts, that is $202.74 |
Use the Mortgage penalty calculator to estimate your prepayment charge. Then, contact your advisor for the precise amount.
Good to know
In reality, the penalty would be lower because it would be calculated by the caisse with software that uses financial principles that are to your advantage.
If you receive cash back when you take out or renew a mortgage and the prepayment is made before the date set out in your contract, you also have to pay a portion of the cash back amount6. The cash back payment calculation method is set out in your contract.
If you have a Yearly Rate Resetter Mortgage and you received a lower interest rate for the first year of the term, you also have to pay a portion of the interest savings you incurred because of the reduced rate7.
Do you want to prepay your mortgagein full? You may do so at any time, but you'll have to pay a prepayment charge. To learn more, see Pay off your mortgage in full.
- If the prepayment is made less than 3 months before the term ends, the penalty is calculated on the prepayment amount for the remaining term of the mortgage, at the mortgage rate.
- If you received an interest rate reduction (e.g., 0.50% per year), the posted rate is reduced by the same percentage.
- The cash back payment is calculated in proportion to:
a) the remaining term as opposed to the full duration of the term (for a full prepayment), and
b) the amount of the prepayment exceeding the allowable 15%. This calculation is based on the balance of the mortgage (for a partial prepayment). - The amount of interest savings to be paid back is calculated in proportion
to:
a) the remaining term as opposed to the full duration of the term, and
b) the amount of the prepayment exceeding the allowable 15%. This calculation is based on the balance of the mortgage.
