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Canadian mortgages have separate amortization periods (say 20 or 25 years for example) and interest rate terms (generally 1-5 years, after which the rate has to
by visiblink 4y ago
Canadian mortgages have separate amortization periods (say 20 or 25 years for example) and interest rate terms (generally 1-5 years, after which the rate has to be renegotiated -- and you have the option of transferring the mortgage to another lender at that time).
You can also let your rate float with the market, which is called a variable rate mortgage.
- kansface 4y agoInteresting. Do you know why mortgages in Canada are so different from the US? They seem much more risky on the buyer’s side.
- Analemma_ 4y agoNobody but the United States has long-term fixed rate mortgages: they're horrible for lenders because the lender has to assume all interest rate risk. The reason they exist in the US is because the government acts as a backstop due to pro-homeownership politics, but it causes a bunch of market distortions that are made invisible to American borrowers.
- rvense 4y ago30 year fixed-rate is very much the norm here in Denmark. There was a period of experimentation leading up to 2007, but I think fixed rate is very popular. I'm certainly happy that's what we went for when we bought our first house two years ago.
- lupire 4y agoIt's hard to call it a "norm" when it's so new that no one has yet seen one completed.
- rvense 4y agoIt's been like this for at least 50 years, maybe more - the underlying system of credit associations goes back to the lat 1700's. The mortgage market was very tightly regulated to really only permit the 30-year fixed-rate mortgages until 2002.
- synu 4y agoWe have them in the Netherlands.
- prottog 4y ago> a bunch of market distortions that are made invisible to American borrowers Anyone who has taken a five-minute look at the real estate market in any major US city can see those market distortions plain as day.
- mikem170 4y ago> Do you know why mortgages in Canada are so different from the US? The U.S. has been heavily subsiding mortgages since the great Depression, through programs such as FHA. Banks would not be willing to loan people money at such low rates over 30 years unless the government and taxpayers backed the loan.
- vkou 4y agoBecause it's more profitable for the lenders, and Canada's government is happy to bend over backwards to make old-boys-club-businesses like banks and telecoms comfortable.
- tel 4y agoThe USG massively subsidizes home ownership. The burden is passed down to taxpayers, but also may cause a drag on the global economy due to lopsided interest rate hedging.