Your mortgage amortization period is the number of years it will take you to pay off your mortgage. Depending on your choice of amortization period, it will affect how quickly you become mortgage-free as well as how much interest you pay over the lifetime of your mortgage (a longer lifetime equals more interest, whereas a shorter lifetime equals less interest but also bigger payments).

Amortization Benchmarks

Let’s start by looking at the mortgage industry benchmark amortization period. This is typically a 25-year period and is the standard that is used by the majority of lenders when it comes to discussing mortgage products. It is also typically the basis for standard mortgage calculators. While this is the standard, it is not the only option when it comes to your mortgage amortization. Mortgage amortizations can be as short as 5 years and as long as 35 years!

Benefits of a Shorter Amortization

Opting for a shorter amortization period will result in paying less interest overall during the life of your mortgage. Choosing this amortization schedule means you will also become mortgage-free faster and have access to your home equity sooner! However, if you choose to pay off your mortgage over a shorter time frame, you will have higher payments per month. If your income is irregular, you are at the maximum end of your monthly budget or this is your first home, you may not benefit from a shorter amortization and having more cash flow tied up in your monthly mortgage payments.

Benefits of a Longer Amortization

When it comes to choosing a longer amortization period, there are still advantages. The first is that you have smaller monthly mortgage payments, which can make home ownership less daunting for first-time buyers as well as free up additional monthly cash flow for other bills or endeavors. A longer amortization also has its advantages when it comes to buying a home as choosing a longer amortization period can often get you into your dream home sooner, due to utilizing standard mortgage payments versus accelerated. In some cases, with your payments happening over a larger period, you may also qualify for a slightly higher value mortgage than a shorter amortization depending on your situation.

Let’s Chat!

I am happy to help with the decision for the amortization that best suits your unique requirements and ensures you have adequate cash flow. However, it is important to mention that you are not stuck with the amortization schedule you choose at the time you get your mortgage. You can shorten or lengthen your amortization, as well as consider making extra payments on your mortgage (if you set up pre-payment options), at a later date.

Ideally, you are re-evaluating your mortgage at renewal time (every 3, 5, or 10 years depending on your mortgage product). During renewal is a great time to review your amortization and payment schedules or make changes if they are no longer working for you.

If you have any questions or are looking to get started on purchasing a home, don’t hesitate to reach out to me today!

With the release of the November inflation data, some were disappointed that inflation remained at 3.4% year-over-year—the same as in October.
However, without the base effects of year-ago energy price declines, inflation would have been less than 3%.

December’s inflation data will be similarly skewed higher. Still, there is ample reason to suggest that interest rates have peaked, and the Bank of Canada will begin to ease monetary policy next year.

The economy has slowed significantly, and the unemployment rate is rising. Consumer spending will continue to slow as monthly mortgage payments rise at renewal. Excess demand is now gone, and housing markets have slowed considerably. Although the road to 2% inflation will be bumpy, the central bank now believes that the overnight policy rate is high enough to return inflation to its target.

Core inflation has been sticky, and wages continue to rise, playing catch-up to past inflation, but events are trending in the right direction. While not even the Governing Council knows when they will begin to cut interest rates or how quickly the process will proceed, policymakers and regulators are worried about the dampening effects of significant increases in monthly mortgage payments for the 60% of loans that will be renewed or refinanced in the next three years.

Just as overstaying their aggressive easing of monetary policy caused inflation, on the flip side, keeping monetary policy this tight for too long could damage the livelihoods of many Canadians, triggering potential financial instability and significant layoffs. These concerns have precipitated a dramatic decline in market-driven interest rates worldwide.

There are many reasons to believe the Bank of Canada will begin to ease monetary policy in 2024. Bond and money markets are building in this expectation.

“New Year, new you” may be a cliché but it is for a reason! The New Year always has us thinking about where we are now, and where we want to end up. When it comes to your personal goals, a review of your finances and estate should be at the top of your list.

Proper estate planning can ensure that you have a stress-free year knowing you are covered!

Is your will up-to-date?

The purpose of a will is to outline your assets and determine how they will be distributed, as well as who will be in charge of managing affairs. Some key components to include in this document are:
• Up-to-date list of your significant assets; note the location if outside your province or outside Canada.

• Who will inherit your assets? And which?

• Outline of where you want assets to pass outside your estate to avoid probate fees (e.g., an insurance policy, an RRSP)? Do this via beneficiary designation.
- If they are minors, do you have a trust or other provisions in place?

• Is the list of beneficiaries in your will up to date? Have there been recent births, deaths or marriages in your family?

• Have you included alternates in case your named beneficiaries predecease you?

• Do you want to give to charities or other organizations?

• If you have children, have you indicated a guardian and spoken to them?
- Did you include an alternate in case the guardian you chose is unable to commit?
- Have you reviewed your choice of guardian as your child grows older?

• Your executor who will carry out your wishes after you die. You can name one executor or two or more co-executors. Be sure to name one or more alternates as well.

Have you assigned a power of attorney?

Another important (and often overlooked!) aspect of estate planning involves naming a power of attorney. This individual is someone you trust to make decisions for you should you become unable to do so due to injury or illness, whether temporary or otherwise. Power of attorney documents are created for you by a wills and estates lawyer (or notary in Quebec) as part of your estate plan.

Do you have mortgage protection insurance?

Through Manulife Mortgage Protection Plan (MPP), you have the opportunity to add a portable insurance policy to your mortgage that helps protect your loved ones and your home should something unexpected happen to you. Unlike bank insurance, MPP is a portable life and disability product that you can take with you, from lender to lender and property to property. This gives you the utmost future flexibility and is unlike bank insurance products which tie you down exclusively to them. To ensure you get the best rate at renewal, you must have invested in an insurance product like MPP that will give you the freedom to move!

Mortgage life insurance will protect your family's future by paying out your mortgage should the mortgage holder pass away. Manulife will also make your mortgage payments while your claim is being adjudicated, so there is no added stress for a loved one at an already difficult time. Mortgage disability insurance will take care of your mortgage payments plus property taxes if you become disabled. Disabilities from sickness and accidents are relatively common and will affect 1 in 3 borrowers throughout their mortgage amortization. Manulife provides budget-friendly payment options, the ability to top-up your coverage and so much more.

These are all important aspects to consider to ensure your estate and family will be provided for should something happen. While never a fun topic, it is an important one and the better prepared you are, the better off your loved ones will be.

I would be happy to discuss coverage with you to ensure peace of mind for your family and their future.

As we get closer to the end of the year, we have some special New Year resolutions for your home! Plus, check out some of my favourite holiday desserts. In addition, don’t miss the latest economic insights direct from Dr. Sherry Cooper!

The New Year is approaching! While we are in the spirit of goal planning and setting our intentions for the coming months, don’t forget about your home!

There are several things you can do to make your home and finances work for you in 2024:

Review Your Home Budget (or make one!): Money can be a stressful subject, but creating a home budget and keeping it updated whether annually, bi-annually, or monthly can truly help you get a handle on your cash flow and what you are spending on. An annual review of your budget at minimum to account for changes in wages, loan payments, expenses and more is a great way to get 2024 off to a balanced start! This is also a good opportunity to think about future renovations, vacations or expenses so you can start a savings fund to meet your goals!

Embrace Minimalism: Heading into January is a great time to take stock of your home and life. For many people, embracing minimalism has allowed them to declutter their minds and increase clarity to focus on what matters in life. Clearing out old furniture, clothes, or anything that doesn’t bring you peace, is a great way to live in the moment and align your home.

Cut Your Carbon Footprint: Your home is a great place to cut energy! Everything from switching off the lights when you leave a room to dialing down your air conditioner and heating, to installing LED bulbs and energy-saving showerheads or toilets, can help you save in the long run and ensure your home is more energy-efficient for the New Year!

Get Growing: Got a green thumb or simply looking for a new hobby? Consider starting a garden at home! Whether you place large planters in your backyard, some pots on the patio, or grow some herbs in your kitchen, this can be a great way to nurture your mind and body! Plus, it adds a little extra life to your home!

Improve Your Work/Life Balance: If you are still working at home and haven’t yet nailed down a dedicated space for your office, 2024 is your year! Having a separate space for your work versus your life can help you with decluttering your brain and maximizing your time and focus both on the clock and off.

Make the Most of Your Mortgage Renewal: As discussed in our last issue, your mortgage renewal is a great opportunity to make your home put in the work for you! With lots of renewals coming up in 2024, now is the time to start thinking ahead! Choose to consolidate debt, utilize home equity, get a better rate, and more at renewal time.

Contribute to Your RRSP: Don’t forget -- February 29, 2024, is the last day to make RRSP contributions for the 2023 tax year! Before your RRSP deadline, there are a few things to consider to help you get a jump start in planning for the future and increasing your peace of mind: should you invest in an RRSP or focus on paying down your mortgage? Is a debt consolidation mortgage right for you? Should you consider the Home Buyers’ Plan to help fund your down payment on your first home?