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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

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
  1. Rate in effect on March 28, 2014. Calculations are based on assumption that interest rate is fixed over the life of mortgage.
  2. 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).
  3. 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 closed mortgage and want to pay it down faster? Once a year, you can make a prepayment with no charge or penalty. 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

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:

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.

Calculation of penalty on different types of closed mortgages
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 prepayment 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.

  1. 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.
  2. If you received an interest rate reduction (e.g., 0.50% per year), the posted rate is reduced by the same percentage.
  3. 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).
  4. 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.

Open mortgage

If you have an open mortgage and you want to pay it faster, you can do any of the following with no charge or penalty:

  • Increase the amount of your payments
  • Make partial prepayments
  • Pay off your mortgage in full

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