It's a decision worth thinking about, as it will have a significant impact on the total amount of interest you will pay over the life of your mortgage.
Here are the advantages and disadvantages that will help you choose between the traditional 25-year and 30-year terms.
How does it work?
If your financial situation allows it and you are able to put more than 20% down, you will not have to insure your mortgage. With some financial institutions, you will have the choice of paying over 30 years instead of 25.
30-year mortgage
25-year mortgage
If you don't have an emergency fund, now might be a good time to create one. It will help you deal with the unexpected.
You could also invest in an RRSP or TFSA, for example, to take advantage of the benefits of these plans, but the return must be much higher than the interest costs on your mortgage.
Unfortunately, keeping the money in your emergency fund or TFSA from being spent can be a daunting task. If this is your case, I suggest that you opt for the shortest amortization possible and thus pay off your mortgage faster.
Conclusion: The longer the repayment period, the lower your monthly payments will be. However, your total interest costs will be higher with a shorter repayment period. The choice is yours!
Tips
To further reduce your interest costs, you can increase your regular payment amount or make a lump sum payment.
If you renew your mortgage and the interest rate is lower, you can keep your payments the same and pay off your mortgage faster.
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