Long-term mortgages are becoming very popular these days. It seems that Canadians care more about lower monthly payments than about total interest paid.
But the National Post reminds us that 40-year mortgages, for example, aren’t cheap long-term (see story).
You can lower your monthly payment 13% by getting a 40-year amortization instead of a 25-year. However, the total interest you’ll pay increases 76%! Very few realize that.
Furthermore, the story cites statistics that suggest only 15% of homeowners with long-term mortgages actually avoid the interest hit by paying down their mortgage faster than required.
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