Quote:Some banks mostly offer fixed-payment variable mortgages which allows homeowners to keep monthly payments the same, but leaves them vulnerable to paying little off the principal, experts say.


For most homeowners, the standard time to pay off a mortgage is 25 years.


Now, in the face of crippling interest rates, some existing homeowners are seeing their amortization period go as high as 90-years as their ‘fixed-payment’ variable-rate mortgages adjust automatically to rising interest rates while the monthly payment remains the same.

There are two types of variable rate mortgages, experts say, one is a variable-rate fixed-payment mortgage, the other an adjustable-rate mortgage — a “floating” payment that rises and falls with changes in the prime rate.

Homeowners with a variable-rate fixed-payment are in a riskier position during a high-interest-rate period, experts say, because they are seeing a greater percentage of their monthly payment go toward interest and not principal — and for a longer period of time.

(07-08-2023, 03:48 AM)MisterSpock Wrote: Well on a 90 year note, the monthly payment should be pretty low.

Granted, don't look at the details, as I'm sure that 300K you borrowed will probably cost you like 1M in interest or more.

At a 90 year term, I hope they through in a plot and a casket for free, you are more likely to see that before you see the loan repayed.

(07-08-2023, 04:28 AM)NightskyeB4Dawn Wrote:

(07-08-2023, 03:48 AM)MisterSpock Wrote: Well on a 90 year note, the monthly payment should be pretty low.

Granted, don't look at the details, as I'm sure that 300K you borrowed will probably cost you like 1M in interest or more.

At a 90 year term, I hope they through in a plot and a casket for free, you are more likely to see that before you see the loan repayed.

@ Infolurker

This is pure straight up usary.

They should all be locked up for even thinking about it.

Quote:In Canada, the amortization period for new mortgages is capped at 25 and 30 years, depending on whether the borrower is considered high- or low-ratio, with a down payment below or above 20%. However, once the mortgage is on their books, lenders can take the liberty to extend it further if need be – even decades longer, reaching lengths of 70, 80, or 90 years. The trouble comes at renewal time when borrowers will need to return to their original amortization length, and will face considerably higher payments.


The financial impact of a 90-year mortgage

But what would be the financial impact if these borrowers actually had to carry a nearly century-long mortgage?

To illustrate how this would translate into dollars, Ratehub.ca crunched the numbers, based on a theoretical mortgage loan with a principal amount of $500,000, and mortgage rate of 5.80%.