Here’s how much a 25-year and 30-year mortgage will cost in Ontario cities and towns
Published May 9, 2024 at 8:27 am
First-time homebuyers will soon have more choice in selecting a mortgage and a new report shows the interest and payment costs for two main options.
Previously, insured mortgages in Canada – those where the down payment is less than 20 per cent – had a maximum amortization period of 25 years, according to Canadian Mortgage Services. So many first-time homebuyers, who often have smaller down payments, faced higher monthly mortgage payments.
But a new policy, starting Aug. 1, 2024, extends the amortization period for these buyers to 30 years on newly built homes.
Even if you’re not a first-time buyer, you can still secure a 30-year mortgage by making at least a 20 per cent down payment or opting for an uninsured mortgage, a report from real estate brokerage Zoocasa notes.
“So if you’re on the fence about which mortgage term length is right for you, it might be helpful to consider whether you’d prefer smaller monthly payments or to pay more in interest over the life of the mortgage,” the report notes.
Zoocasa calculated how much the average monthly mortgage payment would be in 20 cities across Canada and compared the interest paid on a 25-year mortgage and a 30-year mortgage in each.
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Mortgages were calculated assuming a 4.79 per cent fixed rate with a 20 per cent down payment and used the most recent benchmark prices available from Canadian Real Estate Association for March 2024.
Regina, when the benchmark price of a home sits around $313,100, a 25-year mortgage would have payments of $1,784 per month in mortgage payments, and with a 30-year mortgage, they would pay $152 less per month with a monthly mortgage payment of $1,632.
However, opting for a 25-year mortgage would reduce the total interest paid by $52,370 compared to a 30-year mortgage.
In the Toronto area, with a benchmark price of $1,113,600, homeowners will pay $6,344 per month in mortgage payments and will pay $789,682 in interest for a 25-year mortgage.
With a 30-year mortgage, Toronto area homeowners will have a lower monthly mortgage payment at $5,804 per month, but the trade-off is that they will also pay $186,263 more in interest over the entire mortgage period compared to a 25-year mortgage.
In Ontario, the London and St. Thomas area has the lowest home costs and therefore lower mortgage payments and interest among the 20 cities Zoocasa analyzed.
Photo: RDNE Stock project
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