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I think the OP was ambiguous. The OP doesn't say the size or length of the new loan. If you pay it off before the 5 years is up, then you wouldn't take a new on

• listenallyall 4y ago
  Look at the amortization schedule of a mortgage. The first 5 years, you knock almost nothing off of the principal. If a Canadian mortgage is designed to backload principal even further to a balloon payment at the end, then even less of the principal is paid, and the rollover to the next loan is for almost the original amount. Perhaps I am misunderstanding what the OP described, but I don't see how a mortgage holder would ever pay off the principal in 5 or 50 years under that scenario.
  • papercrane 4y ago
    The commenter didn't explain Canadian mortgages well I think. They aren't really balloon payments. At the end of the 5 year term I'm not obligated to make a giant payment, it's just my interest rate automatically converts to the banks posted rate for a open floating mortgage. At that time I'm free to negotiate a new rate, or take my contract to another lender. If I got the same rate every 5 years the payment schedule would be the same as a 25 year fixed mortgage in the US at the same rate.