Quote:
Originally Posted by GP_Matt
I have heard this a few times and am almost certain that it is not right.
Mortgages are not front end loaded, they look that way because you pay the most interest in the first month but that is because you are paying interest on the entire balance which goes down every month for approximately 300 months. After each month the balance is slightly smaller so the interest portion of the payment is smaller. With a fixed payment that means that the principle portion for the next month is slightly larger so as the years go on you are paying more and more principle and less and less interest.
That doesn't mean that it is front end loaded though.
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I think some lenders set up their mortgages where the interest is compounded semi-annually. I beleive ATB did that. Not sure if they still do or not.