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A blended payment is a fixed periodic mortgage payment that combines principal and interest into a single amount, so the borrower pays the same figure each period even though the split between the two changes over time. Early in the amortization, most of the payment covers interest; later payments are increasingly principal.
Interest is charged on the outstanding balance, so when the balance is largest — at the start of the mortgage — the interest portion of each blended payment is largest too. As the balance shrinks with every payment, less of the fixed amount is needed to cover interest, and more flows to reducing principal. The total payment itself does not change; only its internal split does.
This is the standard structure for almost every Canadian residential mortgage payment, whether paid monthly, biweekly, or weekly. It differs from an interest-only mortgage, where none of the regular payment reduces principal at all.
Standard structure: virtually all conventional Canadian amortizing mortgages — fixed or variable rate — use blended principal-and-interest payments.
Rate changes and blending: on a variable-rate mortgage with a fixed payment, a rate change alters the interest/principal split inside the same blended payment; if interest exceeds the payment, some lenders raise the payment or the mortgage reaches its trigger point.
Compounding basis: the interest portion of each blended payment on a fixed-rate mortgage is calculated using the semi-annual compounding convention set out in the Interest Act.
Amortization schedules: lenders provide a full amortization schedule showing the principal/interest split of every blended payment for the term, useful when comparing payment frequency options.
A borrower has a $400,000 mortgage balance with a monthly blended payment of $2,200. In one early month, interest for the period works out to $1,600:
$2,200 − $1,600 = $600. As the balance falls below $400,000, next month’s interest portion will be smaller and the principal portion larger — even though the $2,200 payment itself does not change.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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