thinktorontohomes.com homeabout uscontact us
when you think real estate...
BUYERS  |  SELLERS  |  LISTINGS  |  FREE HOME EVALUATION  |  NEW LISTINGS NOTIFIER

« Condos aren't just for young | Main | Toronto's Healthy Market Rolls Along »

Genworth announced today that it will now insure mortgages with amortizations up to 40 years.

The launch date for the program is scheduled for Monday, October 23, and we will update you further on which lenders will be offering this program. Also, we are in the process of updating the calculators on the www.invis.ca website to include amortizations of up to 40 years – this functionality will be up and running later today.

The pricing of this new product is the standard insurance premium plus 60 basis points. For example on a 95% loan-to-value (LTV) mortgage with a 40-year amortization, the insurance rate would be 3.35% (standard rate of 2.75% plus 0.60% = 3.35%).

Here’s an example of how a $200,000 mortgage with 95% LTV would work for four different amortizations at 5.30%, with no prepayments:

Amortization

25-year

30-year

35-year

40-year

Insurance rate

2.75%

2.95%

3.15%

3.35%

Insurance amount

$5,500

$5,900

$6,300

$6,700

Mortgage amount (original
principal + insurance cost)

$205,500

$205,900

$206,300

$206,700

Monthly payment

$1,238.52

$1,143.37

$1080.97

$1038.11

Total interest paid during
life of mortgage

$165,757

$205,714

$247,708

$291,595

Clearly, savings on the monthly payment with the extended amortizations must be balanced against the higher insurance costs, higher amounts of interest paid during the life of the mortgage, and the fact that home equity will build more slowly.

Not every lender will offer this particular Genworth product, which strengthens the argument that the best approach for any consumer in Canada is to turn to a mortgage broker for maximum mortgage choice, along with professional advice

Posted on Wednesday, October 11, 2006 at 10:58AM by Registered CommenterElaine in | CommentsPost a Comment

Reader Comments

There are no comments for this journal entry. To create a new comment, use the form below.

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
Post:
 
All HTML will be escaped. Hyperlinks will be created for URLs automatically.