Maturity Date of a Mortgage

The maturity date of a mortgage is the last day of a mortgage.  Many borrowers often confuse amortization rates with terms of a mortgage which includes the time period a lender and the borrower are under obligations to each other.  Amortization refers to the length of time a mortgage and mortgage payments are spread over.  The most popular mortgage term in Canada has a 5 year term, thereby having a maturity date in five years.  When the maturity date approaches borrowers are faced with a wide array of options, including renewal, early renewal, and choosing a new maturity date or term of a mortgage.

Maturity dates of a mortgage in Canada can now range typically from 6 months to 25 years. 

Maturity dates of a mortgage should not be confused with mortgage amortization periods which are the lengths of time in which the mortgages must be repaid.  Mortgage amortization periods vary based on the borrower’s circumstances, as one’s mortgage payments can change considerably based on the amortization period selected.    Mortgage amortization periods in Canada cannot extend beyond 25 years for non-conventional high ratio mortgages that require mortgage default insurance.  Mortgage amortization periods for standard conventional mortgages with loan-to-value ratios below 80% typically do not extend beyond 30 or 35 years. 

When lengthening amortization periods, lower monthly mortgage payments result. However, the total interest cost will be higher and it will take longer to pay down or pay off the mortgage.  

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April 27, 2017

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