Each year from 2008 through 2010 the Federal Government reduced the maximum amortization as follows:
Purchases with less than 20% down –from 40–35 years, then 35- 30 and finally 30–25 years where it remains today.
Purchases with 20% or more down were cut from 40–35 years, and then from 35 – 30 (*certain lenders still offer 35 years to specific applicants).
Any risk within the real estate sector can most accurately be measured by the amount of equity in a property. Thus the focus on the purchases with less than 20% was more extreme, and logical.
The following table demonstrates the effect reducing the amortization by five years had at each point, an increasingly powerful effect. It essentially cancelled out the interest rate drops.
Today’s buyers do not qualify for radically higher mortgages thanks to lower rates, anyone who suggests otherwise has perhaps forgotten about the amortization effect. The final move from 30 years to 25 years has the same effective impact as a 1% interest rate increase.
See Link For Details: https://dominionlending.ca/news/the-amortization-effect/
Brought to you by:
Dave, Cindy and Amanda Walker
The Walker Real Estate Team
19 Year Emerald Master Medallion
Qualifiers – Top 2% Team Fraser Valley
HomeLife Benchmark Realty
#1 1920 152 Street
South Surrey, B.C. V4A 4N6
604-889-5004 or info@WalkerRealEstate.ca
Kimberly Walker, Mortgage Broker
Cindy Walker, Licensed Assistant
14 Years Mortgage Experience
Dominion Lending Centers
Valley Specialists
#111 20434 64 Avenue
Langley, B.C. V2Y 1N4
604-889-5004 or cindywalker@shaw.ca
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