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Mortgage Renewal Coming UP and rates higher than 5 yrs ago - Consider increasing your amortization?
March 7, 2025 | Posted by: Paul Gazzola
If your mortgage renewal date is approaching, it's important to take action. You might notice something that's hard to ignore: interest rates are significantly higher now than five years ago. You're not alone if you're concerned about what this means for your monthly payments. One practical solution worth considering is extending your mortgage amortization period. But what exactly does that mean, and could it be the right move for you? Let's break it down.
First, What is Amortization?
Simply put, amortization is the length of time it takes to pay off your mortgage in full. Most homeowners in Canada choose amortization periods between 15 to 30 years, sometimes longer. A shorter amortization means you'll pay off your home faster but with higher monthly payments. A longer amortization reduces your monthly payment amount but extends the total length of your loan.
Why Extend Your Amortization? The Pros and Cons
With higher interest rates today, extending your amortization period can provide immediate financial relief by significantly reducing your monthly payments. If budgeting comfortably each month is a challenge, lengthening the amortization might offer the breathing room you need.
- Lower Monthly Payments: Easier monthly budgeting.
- Financial Flexibility: Frees up cash flow for other important expenses.
- Increased Interest Costs: Over time, you'll likely pay more interest.
- Longer Debt Period: It takes longer to become mortgage-free.
It's a balancing act between short-term affordability and long-term financial goals, and every homeowner's situation is unique.
How Can You Extend Your Amortization at Renewal?
The good news is extending your amortization during your renewal period is usually straightforward. When renewing your mortgage, you'll have the opportunity to renegotiate your terms, including the amortization length. It usually requires little paperwork and can be managed smoothly, particularly with the assistance of a professional mortgage broker.
How I Can Help
As your reliable mortgage professionals, we aim to simplify the process and help you find the best option suited to your financial situation. We go over your current mortgage details, explore various scenarios, and clearly explain how changing your amortization and interest rate impacts your monthly payments and the total cost of your mortgage.
Together, we'll ensure your renewal is as stress-free and cost-effective as possible. Don't wait until you're feeling overwhelmed. Let's discuss your options now and find the mortgage renewal strategy that's right for you.
Contact us today, and let's take control of your financial future!
