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40 Year Mortgages Dominate the Market - What's the Actual Payment Cut?

It's only been 15 months since the introduction of the 40 year mortgage and it's already dominating the mortgage purchase applications.

Homebuyers who extend their amortization from the traditional 25 years to say 33 years could cut their monthly bill by as much as a 1 percentage point drop in interest rates.   The mortgage payment cut is even greater when extended to the full 40 years available.

Add the good news of another Bank of Canada rate cut and buyers can get an even better break on their monthly payments.

With the increase in house prices, this is good news for buyers.   It gives a bit of breathing room and increased purchasing power.   The trick is to keep an eye on rates down the road.   If you are locked into a 5 year closed mortgage, what will happen in 5 years if the rates go up.   Watch the rates, if you get nervous, call your banker and try and negotiate an extension onto your closed mortgage for a longer period, don't wait for the 5 year anniversary.   Neogitate with your bank and remember there are options if you take the time to ask.

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