Both variable and five-year mortgages are now available for less than 3 per cent. Those low rates won’t last forever, and there’s a simple way to protect yourself against rising rates and save money at the same time.
Finance Minister Jim Flaherty had the right idea last year when he tightened the rules for mortgage insurance by cutting the maximum amortization from 30 years to 25.
Critics argued that because this measure boosted the minimum monthly payment for an insured mortgage, many Canadians who would have bought homes could no longer qualify – and have blamed this change for the subsequent slowdown in real estate markets.
But all Canadians planning to take advantage of today’s low rates to buy a home or renew a mortgage would be wise to follow Flaherty’s lead – and go a step further by opting for an even shorter amortization.
Let’s look at the numbers…
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