If you’re a Canadian homeowner looking for ways to lower your mortgage payments, here’s some good news: 40-year amortizations are making a comeback!

CMLS Group has announced the launch of the Aveo Flex 40, a mortgage product set to roll out in Ontario, Alberta, and British Columbia. This marks a significant shift in the mortgage market, as 40-year amortizations were once widely available but were phased out in 2008. Additionally, in 2012, the Office of the Superintendent of Financial Institutions (OSFI) introduced B-20 guidelines, capping insured mortgage amortizations at 30 years. However, since CMLS operates with a diverse capital base, it is not subject to these restrictions. Which is allowing them to bring back extended amortization options.

How Does the Aveo Flex 40 Work?

With the Aveo Flex 40, borrowers can extend their mortgage term to 40 years, effectively lowering their monthly payments. However, this comes at a cost! Interest rates for this product start at 6.84% for a 1-year term and 7.09% for a 2-year term.

Is a 40-Year Mortgage Right for You?

While a longer amortization can make homeownership more affordable in the short term, it’s important to consider the long-term financial impact. Extending your mortgage term means paying more interest over time, making this product suitable only for specific borrowers and short-term financial strategies. Otherwise, you could end up feeling like you’re renting your home from the bank rather than building equity.

Final Thoughts

The return of 40-year amortizations provides more flexibility for Canadian homebuyers and homeowners looking to reduce their mortgage payments. However, it’s crucial to weigh the pros and cons before committing to an extended-term mortgage.