Back to Blog

The Truth About Mortgage Math

General Peter Paley 26 May

Are you tired of the mass media paranoia?  The Housing Bubble! Debt-to-income Ratios! Canada Is On The Verge Of Economic Collapse!  Foreign Investors!  The Stress Test!  The Liberals, The Conservatives, The NDP are destroying our country or province or something or other virtually every day.  It would seem that the sky is falling.

Take a deep breath.

Now, take another deep breath.

When I became a mortgage professional,  we were taught the basics and taught some simple facts.

  • The mortgage default rate in Canada is less than .3% (at the time of writing).
  • If mortgage interest rates double, your mortgage payments will increase by only 32-38% depending upon your amortization.
  • Every .25% increase or decrease to oyour mortgage rate will change your mortgage payment by only $0.13 /$1000 of mortgage/month.
  • The difference between a 25 year amortization and 30 year amortization is about $.054/$1000 of mortgage/month.

In my almost 20 years of the financial services industry, I have never seen as much negative press around our industry.  The clients that are coming into my office are very well prepared.  They have saved their down payments, have positive net worth, and EXCELLENT credit!

Do not be deterred by the negative media.  Contact your friendly neighborhood mortgage professional today!

Peter Paley