25 year amortization: savings or trap?

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There is a lot of discussion in Canada about the amount of consumer debt; and, if mortgage amortizations need to be reduced to 25 years compared to the 30 year amortization that is now also offered.

First:  a lower rate and a lower amortization saves you money.  No ifs, ands, or buts!

The remaining question is this:

If you are taking the 25 year amortization because you can afford the payments today, and it will save you money: how high does the rates have to increase before you feel trapped by the decision to take a 25 year amortization?

Each answer is based on a personal budget and forecast.   You may have an opinion as to what the rates will be in years to come.  You may have a fear of what the futures rates may cause your payments to become.

To test your capacity to pay when the mortgage comes due in the future, there is an easy "fill in the boxes" spread sheet you can have.

It will show you what your interest costs will be, your future balances, and most importantly, your future payments.

Just send an email, saying "25 or 30"