Why you should consider a 40-year mortgage amortization – ft. Tracy Jones

July 10, 2020

As an associate and mortgage specialist with Sunova, I am extremely happy that our credit union has started offering a 40-year mortgage amortization option. I believe this longer amortization can be helpful and make financial sense for many home buyers.


Before we talk about the idea of the 40-year mortgage amortization, it’s important to understand the difference between an amortization and mortgage term.


  • A mortgage term is the length of time you are committed to a mortgage rate and the conditions set out by the lender.
  • On the other hand, a mortgage amortization is the length of time it will take you to pay off your entire mortgage. (This will be helpful later, I promise).

Alright, let’s get started.


What are the benefits of a 40-year mortgage amortization?


If you have debt payments or other larger financial obligations and expenses, the major benefit to a longer mortgage amortization is the lower monthly payments that will help free up cash. Members might use their extra cash to pay off car loans, higher interest debt, or credit card debt. Some might even choose to save the cash by putting it in a registered account, like an RRSP (Registered Retirement Savings Plan) or TFSA (Tax-Free Savings Account).


I also like reminding my members that a 40-year mortgage amortization is FLEXIBLE. You aren’t locked into a payment schedule for 40 years (that would be crazy…) and are only locked in for the amount of your mortgage term. (See, I told you the definitions would come in handy!) At the end of your mortgage term, whether it’s a 5-year, 3-year, or something else, you can switch to a lower amortization if you feel you’re financially able to do so.


Who might benefit the most from a 40-year mortgage amortization?


Realistically, anyone who needs to free up extra cash per month or who doesn’t find renting attractive should enquire about a 40-year mortgage amortization.


More specifically, first-time homebuyers can benefit from a longer amortization. Why? Usually, (although not always) first-time home-buyers are younger in age, with lower salaries. A 40-year mortgage amortization can help the home-buyer afford a house more quickly, which can be a big plus for those trying to maximize their housing dollars.


Lastly, with COVID-19 still around us, there is still uncertainty with jobs, income, and debt payments. A 40-year mortgage amortization could provide that peace-of-mind some members are looking for.


Are there requirements to qualify for a 40-year mortgage amortization?


Yes, there are a few eligibility requirements for a 40-year mortgage amortization with Sunova Credit Union.


Here’s a list:


  • A 20 percent down payment on the purchase price of the home.
  • The home-buyer needs to be making money.
  • The mortgage can only be for a main residence.

I also like to remind all who are interested that your mortgage rate may be higher (although it might not be) as this depends on your credit score, net worth, and your total debt service ratio. Your lender (like me, Tracy!) will be able to talk about these requirements and your eligibility in more detail.


Finally, a more general ‘requirement’ is to realize that although a 40-year mortgage amortization will lower your monthly payments, you will be paying more interest in the long run. This is something you and your Sunova lender should discuss in full to determine what mortgage amortization is right for you.


If this might be of interest to you, I highly encourage you to reach out to me or another Sunova lender (who are all awesome, by the way.) We look forward to hearing from you and can’t wait to make your home-buying dream a reality.



About me (Tracy Jones)


I moved to Canada sixteen years ago, and like to think of myself as the resident ‘Brit’ here at Sunova Credit Union. My hobbies include drawing, teaching art, and being out at the lake (or ocean when I’m back home in England). I enjoy talking to my members about mortgages, loans, and even drawing techniques.

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