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So, you bought a house. What next?
If you’re asking yourself questions like, what if I want to make extra payments? Are there penalties for that? And what happens if I miss a mortgage payment?
…then you’re in the right place!
We spoke with Nicole Tumbocon, Personal Banking Advisor with Cambrian, and this is what we learned.
You’ll typically set up regular minimum mortgage payments with your advisor, most often monthly or biweekly, for the length of your initial term (which usually lasts for one to five years). At the end of this term, you’ll need to either renew or refinance your mortgage.
The total time it takes to pay off your mortgage depends largely on your initial down payment, as well as on the chosen regular mortgage payment amount. Making additional payments along the way can significantly shorten this timeline and help you become mortgage-free sooner.
A principal payment is an extra payment made directly toward your mortgage balance. Regular monthly payments are divided: part goes to interest, and part goes to principal.
Extra payments go directly to the principal balance, reducing the mortgage more quickly. This lowers the total interest paid over time.
You don’t need to make extra payments at all, but if you do, you don’t have to make large payments either. Small amounts still help.
“Frequent smaller payments allow flexibility and consistency,” says Nicole. “They also can align better with your pay schedule, making budgeting easier and helping you stay on track with your financial goals.”
Cambrian members can:
“Even small additional principal payments made consistently can have a meaningful impact over the life of a mortgage,” says Nicole.
Cambrian offers flexible pre-payment options. With a fixed-term or closed variable mortgage, members can make 20 per cent pre-payments of the original loan balance.
Example: If your mortgage is $300,000, you can pre-pay up to $60,000 annually without penalty.
This can be done every anniversary date—the date your mortgage was funded or renewed.
Example: If your mortgage starts May 1, you have from May 1 to the next May 1 to make extra payments.
As long as total extra payments don’t exceed 20 per cent, extra pre-payments can be:
“This flexibility is one of the advantages of having a mortgage with Cambrian,” says Nicole, “as not all financial institutions offer the same level of pre-payment privileges. In some cases, other lenders may limit pre-payments to 10 per cent and allow them only once per year.”
“Cambrian mortgages do allow skipped payments, but it’s important to understand how it may affect your mortgage over time,” says Nicole. “The payment does not disappear—it gets added back into the mortgage balance.”
Interest will continue to accrue, increasing the total cost of the mortgage. It may also extend the mortgage timeline, delaying when the mortgage is fully paid off.
If you miss a payment, future payments usually stay at the same amount, but more of the payment may go toward interest instead of the principal.
Remember: missed payments may affect things like your credit history and future loan approvals, but exceptions may be considered.
“At Cambrian, we understand that financial situations are changing and you might need to skip a mortgage payment,” says Nicole. “We offer solutions to these challenges. It’s best to reach out to your advisor to discuss your options and how you can qualify.”
Book a meeting today! We can talk about your mortgage and build a plan that works for you.
We would be happy to discuss your unique situation with you.
Our goal is to make complex topics like this one, simple.
