Is a 25-year mortgage, or a 30-year mortgage better?

Amortization is the total length of time it takes to pay off a mortgage. The most common mortgage lengths in Canada are 25-years and 30-years.

Deciding which mortgage length to choose will depend on your personal financial goals. A great rule-of-thumb is:

25-year mortgage for owner-occupied properties; 30-year mortgage for rental properties 

Why choose a 30-year mortgage for a rental property?

In Canada, interest being charged on a loan used for investment purposes is tax deductible. A 30-year mortgage on a rental property will create a sizeable tax deduction, and have lower monthly mortgage payments.

For example, a $400k mortgage amortized over 30-years with an interest rate at 2.39% create a tax deduction of approximately $9,000/yr, and the lower monthly mortgage payments will increase the annual cash-flow by roughly $2,340 when compared to a 25-year mortgage option.

For more information on which mortgage option makes sense for you or your clients, please contact me at:

Adam Sale Mortgages
adamjsale@gmail.com
778-215-4121