WelshDragonsWales

OK, i am not being a nosey so and so, just wondering if there is an average 'term' for those of you/us needing a canadian mortgage.

There is so much info etc... the normal for uk is 25 years max term ( i think that is what the majority of folk go for ) however on making enquiries it seems that brokers advise 35 years!! it seems like a long time. Are canadian mortgages full repayment ones or are they interest only or does it depend?

Sorry for questions that may seem daft - but info from BE members tends to be reliable and true life - so it always helps to ask you all.

Many thanks

Dawn and co x

Steve_P

I don't have a mortgage.

However to answer your question as far as I know interest only mortgages have not reached the residential market yet in Canada most if not all residential mortgages are full repayment.

Most mortgages are for 25 years although there are some 40 year mortgages around and they are becoming much more popular. As the renewal terms are anything from one year to ten years, as a persons circumstances change the length of the mortgage can be reduced when it comes due for renewal and the mortgage can be paid off much earlier than the original 40 years.

You can apparently get an interest only line of credit using up to 75% of the equity in your home but that is a different animal.

Cheers
Steve

Elaine B.

Hi Dawn

our Mortgage is 25 years at a fixed rate the payments are a mixture of principal and Interest. From what I've seen working in a real estate lawyers office in Toronto this seems to be the most common term. Also be wary of Mortgage brokers even in my limited experience I've come across a few who don't know as much as they should.

WelshDragonsWales

Congratulaltions on NO mortgage - wish we could say the same - but hey ho, that is life.

Thanks for the info

Dawn

WelshDragonsWales

Hi Elaine

Thanks for your reply, happy new year

Almost Canadian

Also be aware of the fact that "term" over here is not necessarily the same as "term" in the UK. What people refer to as the term of their mortgage in the UK is normally called the amortisation period over here. Term over here is usually 5 years following which the mortgage is, in theory, repayable but, in practice, just continues as before although any incentives (fixed interest etc) will expire. Think of it as analogous to a 5 year fixed interest mortgage in the UK.

In addition, something that I wish others had told me, let's say you agree to a repayment type mortgage, 5 year term, amortization period of 25 years with a monthly payment of $1500 to include interest (say $1000) and capital. (say $500) If you are on a variable interest rate and the rate goes up, unlike in the UK where your monthly payment goes up, here the amount you pay monthly remains the same but the amount applied to interest and capital change so that the mortgage will take you longer to pay off, the converse applies if rates go down. ie, you get the benefit of a fixed rate UK mortgage (certainty of monthly payment) but with the benefit of the variable rate (benefit if the rate goes down of course).

If someone had explained this to me we would have gone on a variable rate as, over the long term, they are usually cheaper.

HTH

WelshDragonsWales

Thanks - a great help - its the little things like this that are good to know. many thanks for the info.

Dawn

iaink

5 year term amortized over 25 years is pretty normal (ie you pay over 25 years, with the rate fixed for 5 years at a time)

As far as I was aware variable rate = variable payment? so the variable payoff date thing is news to me

antler

Only go with a reputable financial institution, Bank or Credit union, no broker needed, he has his own interest in mind, not yours, whatever they tell you rates are negotiable, they'll drop a half a point, they want your business, make sure that early payments can be made without penalty, typically 10% of the principal annually, try to pay every 2 weeks, this pays a 25 year mortgage off in about 14 years. Hammer the buying price down, every $1000, off is going to save you $3000. All this worked for us. Good Luck.

dbd33

Happy with broker self. Got best rate. Had ideas creative. Nice tits too.

JonboyE

I split my mortgage 50% fixed, 40% capped and 10% variable. The fixed is fixed and the variable is truly variable and the payments go up and down with interest rates. The caped part is different. Say you cap the mortgage at 7% when the variable rate is 6%. Your monthly cash payment is always the equivalent of 7% but as long as the variable rate is less, the difference is applied to the capital. If the variable rate goes above 7% then you effectively have a fixed rate mortgage at 7%.

The capped rate will always be higher than a straight fixed rate, but does give a little of the best of both worlds.

Dave+Jules

WOW sounds like she (assuming she because of the tits remark) is someone we should all be using. Location please dbd?

airbornesapper

Sorry but this is not true, certainly it will pay down the principal quicker, even more so if you pay weekly vice accelerated bi-weekly but will not reduce things by that magnitude (11 years).

The link below explains far better than I, bare in mind also the effect is amplified if you opt for accelerated weekly:

http://homebuying.about.com/cs/mortg...eekly_plan.htm

A mortgage amortized over 25 years is reduced to 19 years 8 months (accelerated weekly). Most most mortgages also allow you to pay unto 10-15% of the original amount also each calender year without penalty shaving time off as the pocket book allows.

Simply stated, if you pay 1000 each month, net outlay is 12K per annum. Pay 250 per week, net outlay 13K per annum...reducing the amortization period.

MarkG

I'd been wondering that; paying bi-weekly knocked several years of our 25-year mortgage, but I wasn't sure whether we were paying 26 times a year or because we were paying off the interest faster. Some people seem to use 'bi weekly' to mean paying every two weeks, and others to mean paying twice a month.

Not that it matters much, as we'll probably pay it off in 5-10 years anyway.

antler

Airbornsapper is of course correct, to pay off a 25 year mortgage in a little less than 14 years, My wife, Lady Brenda, reminds me that we took 3 year terms during a period when interest rates were falling, unknown to me she paid a couple of annual payments, once we even paid an 1,800$ penalty to renew early, that saved $1,000. sorry for the misinformation.
I recently saw an interview with a lady in an Eastern US city, she was being evicted, 30 years ago her mortgage was $30,000,by that day it had climbed to $130,000, A house is not an ATM, machine.