Yes. You read that correctly. Canada now has 40 year mortgages.
The government just announced 40 year mortgage amortizations to help Canadians lower their monthly payments. When I first heard this, I thought there may be some help for those who are struggling to make their monthly payments. After doing more research, I discovered there is a catch and personally I think this is a joke!
Advantages
- Slightly lower payments
Disadvantages
- Higher interest Rate
- Canada’s major banks do not offer 40-year mortgages
- Requires a minimum down payment of at least 20%
- Takes several more years to pay off your mortgage
The only people this new 40 year mortgage amortizations will help are the investors who need to lower monthly payments on their revenue properties. This will enable landlords to keep rents a bit lower. But for most Canadians who are struggling to make current mortgage payments with today's interest rates - this is a complete joke. Even if you have the 20% equity in your current home and switch to a private lender for a 40-year mortgage, you will still be paying about a 9% interest rate. This makes absolutely no sense.
