long term mortgages in calgary

Sep 14, 2020 | Mortgages | 0 comments

Getting a 30 year Mortgage in Calgary?

Mortgages | 0 comments

As you know, getting a mortgage is a really a large commitment and typically you spend much of your life, “paying it back.” Have you ever thought of the possibility of getting a 30 year mortgage in Canada? Lots of people wonder if this is even a good idea.

Here are a few tips and tricks regarding a 30 year amortization or 30 year mortgage life. 

First things first, Can you obtain a 30 year mortgage in Canada? Does it even exist?

Yes, 30 year mortgages are available in Canada! It’s important to remember though, that if you’re obtaining a mortgage with less than 20% down payment, your mortgage will have to be amortized over 25 years. In this case, the 30 year mortgage will not be available to you.

Like any other loans and debts that incur interest, a longer amortization period may not always be to our advantage. When you’re making the decision if this is right for you, it’s important to consider that you need to balance the extra interest you would incur, with the decreased monthly payments. Sometimes, decreased payments increase your monthly cashflow and better balance your budget, it’s worth the extra interest for the flexibility in your monthly budget in the short term.

What Are High & Low Ratio Mortgages?

What is a High-ratio and Low-ratio (or conventional) mortgage?

A high ratio mortgage means that the percentage of down payments funds are LESS than 20% of the price of the home. A low ratio, or conventional mortgage means that the down payment funds are 20% or MORE of the price of the home.

What is different about High-ratio mortgages?

When you’re purchasing a home with a high ratio mortgage (meaning less than 20% of the purchase price), you are required to pay “default mortgage insurance.” This often called, “CMHC Insurance,” but it’s important to remember that there are 3 mortgage insurers in Canada. The insurance is added to the mortgage amount and it protects the LENDER in the case that you were to default on the loan. The advantages of this loan are the ability to quickly save for the down payment and the super low interest rates that the attract. The disadvantage is the extra insurance cost and maximum amortization of 25 year.

What is different about Low- ratio mortgages?

Borrowers with 20% down or more will be eligible for a low ratio or conventional mortgage.. Since these types of mortgages do not require default mortgage insurance, it is possible to obtain an amortization period (or mortgage life) of 30 years. In certain cases, 35 year amortizations may also be possible.

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How to obtain a 30 year mortgage?

  • Look for a home in the price range that matches your available down payment

Since a longer amortization period would mean having at least a 20% down payment, it will be best to know your limits. Use a mortgage affordability calculator to know the purchase price you will be aiming for to assure that the down payment is at least 20%.,

  • Save for a down payment

A minimum of 20% down payment plus closing costs are needed to be able to purchase a home with a 30 year amortization.

  • Find the best mortgage provider

There are several lenders or mortgage providers that will offer a 30 year mortgage. Since longer amortization period would have higher total mortgage interest, it will be best to do your research and ask around to find the best mortgage provider with the lowest mortgage rates. Utilize our quick application below to get setup with a mortgage professional who specializes in 30 year mortgages.

Bottom line

Obtaining a 30 year mortgage is possible in Canada and is offered by several mortgage providers, but a minimum of 20% down payment will be required. It is important to remember that longer amortization periods may not always be the best option as borrowers will most likely pay more interest over the the term of the mortgage.

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