The most meaningful advantages of owning a home are not really financial in nature. You can pursue hobbies you enjoy, decorate as you wish and keep a pet of your choosing – all without the approval of a landlord.
More often than not, a real estate purchase involves a lifestyle decision, so it’s a nice bonus that paying a mortgage promotes savings discipline and can actually help you build wealth over time.
Making payments on a fully amortizing mortgage requires you to set aside money every month, because a part of each installment is allocated to the repayment of the borrowed principal.
Each month, both the loan balance and the amount of interest due will drop, and the principal portion of the payment will increase until it is paid off.
Shorter Terms Get You There Faster
The typical amortization period in Canada is between 25 and 30 years. Some borrowers, especially first-time buyers, stretch the amortization period to 35 years for more affordable monthly payments or to qualify for larger loan amounts in areas with more expensive housing. Of course, that choice significantly reduces the amount of equity they can earn in the early years of the loan.
Those who can afford a larger monthly payment might want to consider a shorter 10-15 year amortization period and save thousands of dollars in interest over the life of the loan. Also, a much higher percentage of each payment goes toward principal from day one, so homeowners can build up savings more rapidly.
Today’s low interest rates make a shorter repayment schedule realistic for a greater number of buyers, but it’s also a great option for refinancing homeowners who want to stay on track to pay off their mortgage before retirement.
You don’t Qualify for a Mortgage but want to Own your Own Home?
Our Rent-to-Own Home Purchase Program allows you to purchase a home today without having to meet the typical qualifications required by conventional lending institutions. It is specifically designed to help people who are having difficulty obtaining conventional financing. If you can afford a reasonable monthly payment, this program might be for you!