In this video, I look at who is still offering 35 or 40 year amortizations and explain some recent changes in the market place.
Hi, everybody. It’s Rowan Smith from the Mortgage Center. It’s been a while since my last post and I wanted to provide an update on a couple of things that I get constant questions about in our market place.
Back in April when the changes the government handed down took effect it got rid of what most people thought would be all of the 35 and 40 year amortizations. So the question is, is a 35 or 40 year amortization still available? Short answer, yes. Now, the longer answer is a little more complicated…
For example, who is it that offers that? Well, if you’re dealing with TD Canada Trust, Scotiabank or one of the large chartered banks, they’re not going to be able to offer you an amortization of 35 to 40 years. There are a couple of credit unions that will do it and there’s a lot of non banks, for instance, broker channel lenders they will also do a 35 or even a 40 year amortization.
So, what’s the criteria? First, you need 20 percent down. The reason for this is, a bank, once they put 20 percent down, cuts CMHC or mortgage insure out of the equation for most part. In that circumstance they can take on as much risk as they want, more they can offer, whatever product they want, because the government isn’t involved in that transaction any longer.
So, if you want to get a 40 year amortization or a 35 year amortization you can do so if you have 20 percent down.
Now, why would you do that? You could be in your fifties thinking, “Well, I’m not going to live until I’m 90 years old.” It’s not about that, it’s about cash flow. Many times people that opt to take a 35 or 40 year mortgage are doing so on an investment property or they want to have a property that’s positively cash flow each month or perhaps it’s because there’s a sick situation in life and they need to minimize the minimum “out of pocket” each month.
So, if you were somebody you know needs a 35 to 40 year amortization, I can help them, please send them my way. It’s Rowan Smith from the Mortgage Center