INSURED MORTGAGES
If you have an insured mortgage (less than 20% down /or/ equity), then you will require mortgage insurance through CMHC, Genworth, or Canada Guarantee (the newest mortgage insurer to enter into Canada). Within the walls of these insurers, you will find the option to pick and choose how long you would like the life of the loan to be. In Canada today, the ability to tailor your mortgage around the length of time can be of great benefit; there is the traditional 25 year amortization, and now within the insurer guidelines (as dictated by the Bank of Canada) - 30 years amortization is available.
There is benefit to extend your amortization period up to 30 years. Not only does it allow you to qualify for "more home" (which is good in today's housing market), but it also brings your monthly payments down. What about the argument of having your mortgage for the NEXT 30 YEARS?? If you think signing onto a 30 year amortization period is daunting and intimidating, you're not alone. But consider this - with the ability to pre-pay your mortgage up to 20% of your regular monthly payments every month, or lump summing up to 20% of original principle amount every calendar year, your 30 year amortization is quickly reduced to reflect more like a 25 year amortization period…and in a lot of cases, LESS than 25 years. Before we get into an example of what an extended amortization period looks like, we should disclose that there is an insurance premium applicable to obtaining an insured mortgage, and it is dictated by the loan-to-value of the loan:
| Premium Rate Table |
Loan-to-Value
| Premium on Total Loan Amount |
Up to 65%
| 0.50% |
65.01 - 75%
| 0.65% |
75.01 - 80%
| 1.00% |
80.01 - 85%
| 1.75% |
85.01 - 90%
| 2.00% |
90.01 - 95%
| 2.75% |
A 0.20% premium surcharge will be applied to a 30 year amortization period.
So what if you don't have up to 20% of the total monthly payment to ADD ON to the payments, and your "lump sum" money at the end of every calendar year goes toward your vacation! That's ok, even by merely changing your payment frequency; you can eliminate years off of your amortization period. Let's have a look at the way to decrease your 30 year amortization period more quickly, without you even KNOWING it!
Payment Frequency |
Principle Paid |
Interest Paid |
Balance |
Amoritization Left |
Monthly |
$8,238.22 |
$23,783.18 |
$91,761.78 |
25 yrs |
Bi-Weekly Regular |
$8,238.90 |
$23,747.60 |
$91,761.10 |
25 yrs |
Bi-Weekly Accelerated |
$11,303.09 |
$23,387.41 |
$88,696.91 |
20yrs. 4 mos. |
Weekly Regular |
$8,237.05 |
$23,732.55 |
$91,762.95 |
25 yrs |
Weekly Accelerated |
$11,320.30 |
$23,368.90 |
$88,679.70 |
20yrs. 3 mos. |
CONVENTIONAL MORTGAGES
Conventional mortgages are mortgages that have equal to, or greater than 20% down - or equity in your home. Did you know that you can still amortize your conventional mortgage up to 40 years? True! There are some lenders on the market that will still provide 40 year amortization periods. Contact us to get more information!
At the end of the day, you can still extend the amortization period whether it's an insured mortgage, or conventional mortgage. Quite impressive! To get a better comprehension for the payment frequency, see "payment frequency". It truly is a great benefit to be able to apply for an extended amortization period to get you into ownership...FASTER!
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