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Longer mortgage amortizations in demand

December 15, 2017


Changes that will make it harder for some homebuyers to qualify for a mortgage are expected to boost demand for loan amortizations longer than the traditional 25 years.
Only 14 per cent of Canadian mortgage holders have existing extended amortizations of more than 25 years, but that number has climbed for recent purchases, reaching 17 per cent this year.
This ratio could increase next year as borrowers attempt to lower their monthly mortgage payments in the face of the new “stress test” mortgage regulations that come in January 1, and the potential for higher interest rates later in the year.
The maximum amortization for a mortgage in Canada is generally 35 years, although some non-prime lenders will do 40 years.
The majority of new borrowers who can't qualify at a 25-year amortization will choose a 30-year repayment option, according to mortgage brokers. This option lowers the restrictions of the new stress test and would allow more buyers to qualify.

 


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