When you take out a mortgage on a home, you'll generally have your regular payment automatically deducted from your account, to cover the entire amount. This can be deceiving, since your mortgage payment may consist of several components: the mortgage principal and interest, property taxes and mortgage life insurance. Let's take them one at a time.
The mortgage principal is the amount of the original mortgage, less any payments made towards it. This does not include interest, which is calculated on the remaining principal balance and paid with your regular payments.
Generally, mortgage interest costs are front-loaded, so that that interest comprises a much larger percentage of your regular mortgage payment at the beginning of the life of the mortgage than toward the end.
This may be part of your regular mortgage payment. The property taxes that are based on the official assessment of the market value of your property. These taxes are ordinarily paid in installments. CIBC will hold these payments in escrow until they are due as the respective city/municipality will send the bills directly to CIBC.
Mortgage life insurance
For convenience mortgage life insurance premiums are added to your regular mortgage payment. Should you pass away and your claim is approved, the outstanding principal balance of your mortgage on the day you pass away would be reduced or paid off (up to a maximum of $750,000).