undefined | Better HN

0 pointsgoodcanadian8y ago0 comments

Oh my. We are arguing over semantics. In the US, a fixed rate mortgage typically has a term equal to its amortization schedule. I.E. your interest is fixed for 30 years. In Canada, there are things called "fixed rate mortgages" where the interest is fixed for the term of the mortgage, but I have never seen a term longer than 5 years (most are shorter). The mortgage is typically amortized over a period of no longer than 25 years. So, in Canada, you have to get a new mortgage every few years and you are at the mercy of interest rate changes.

0 comments

2 comments · 2 top-level

ProfessorLayton8y ago

This sounds like its both good and bad, depending on which side you're on. Tracking current interest rates helps keep the market liquid, something that many "hot" markets aren't (Bay Area).

A lot of people in the Bay Area got their 30y mortgages locked in at a fantastic (low) 3.x% in the last ~5y, and would be hesitant to give that up, even if they wanted to upgrade. Combined with with property taxes that are locked to inflation, means that a homeowner has an incentive not to sell, and buyers compete for limited inventory.

papercrane8y ago

> but I have never seen a term longer than 5 years (most are shorter).

Five is pretty standard, but you can get longer if you want. RBC has seven year rates on their website, and if you ask you can get the full term of your mortgage. The rate is ridiculous though, for example, in April 2013 the RBC posted rate for a 25-year term was 8.75%. Obviously negotiable, but still a high starting point.

When I was financing our first home our mortgage broker said he only ever had one person get a 25-year term.

Source for the 25-year rate: http://business.financialpost.com/personal-finance/mortgages...

j / k navigate · click thread line to collapse