Mortgage Amortization Options
Amortization is the total length of time it takes to pay back the principal mortgage amount in full.
Over time, property values have increased substantially as compared to income levels so it has become necessary to implement ways to assist borrowers in keeping their mortgage payments affordable. Extended amortizations allow the mortgage to be amortized for a period longer than 25 years.
Extended amortizations enhance affordability and can make the possibility of home ownership more accessible to more people.
Traditionally in Canada mortgages are arranged with a standard 25 year amortization, but may be as high as 40 years for some lenders.
For a mortgage of $200,000.00 at an interest rate of 4.75%, amortized over 25 years, your monthly payment is approximately $1,134.00.
Increasing the amortization to 30 years lowers the payment to $1,038.00
Increasing your amortization from 25 years to 30 years saves you $96.00 in monthly mortgage payments.