Latest in mortgage news: Equitable Bank unveils 40-year amortization mortgage - Mortgage Rates & Mortgage Broker News in Canada
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Equitable Bank has announced that, in partnership with a third-party lender, it is introducing a new 40-year amortization mortgage product.
  • Affaires de Piasses@lemmy.caOPM
    10·
    9 months ago

    Although exact pricing was not yet available, rates are expected in the 9% range given that this is an uninsured alternative lending product with an extended amortization and potential higher risks

    Can you feel affordability flowing?

    EDIT : Just for fun, I ran the numbers :

    • Loan of $500,000 at 7% over 25 years: monthly payment $3,534, total interest $560,169

    • Loan of $500,000 at 7% over 30 years: monthly payment $3,327, total interest $697,545

    • Loan of $500,000 at 9% over 40 years: monthly payment $3,857, total interest $1,351,268

    I don’t even understand the existence of this product…

    • Inky@lemmy.caEnglish
      3·
      9 months ago

      The higher rates more than negate any benefit to monthly payments of extending the amortization. I have no idea why someone would choose this.

      • Affaires de Piasses@lemmy.caOPM
        2·
        9 months ago

        The only reason I can see is that the mortgage isn’t funded by Equitable Bank but by a third-party lender. So I wonder if this is a way to circumvent the lending ratios on mortgages, which would allow people to qualify for higher amounts despite the higher interest rate.

    • Cows Look Like Maps@sh.itjust.works
      2·
      8 months ago

      Why did you increase the interest rate to 9% for your 40 year calculation?

      Edit: oh, in the article it says they expect rates to be in the 9% range.

      I agree with the other commenter. With the higher rate and no benefit of the longer amortization period, this is insane. Doesn’t do anything to help people trying to afford a mortgage.