Condos in Toronto are also being marketed as the affordable housing alternative. But prices are now rising for condos at the same rate as houses. So how can first buyers crack the market?

Consider a mortgage with a 25 year amortization rate. (Amortization is the time it takes to pay off a loan with the same fixed payment and interest rate.) The monthly payments for a $200,000 mortgage are $1279.61 at a 6% interest rate. Last year, the Federal Government allowed lenders to increase the maximum amortization from 25 to 40 years. That means if the lender allows a buyer to spread these payments over 40 years, the monthly payment would drop to $1090.18. A saving of $189 a month. That's good news for people with low incomes trying to qualify for home ownership. At the same time, this extended period will mean that buyers will also end up with thousands of dollars in extra interest payments.

Is this the end to extended amortization periods? Why not 50 years? In Spain, you can now get mortgages with 100 year amortizations. We all know that people don't live long enough to pay off that kind of mortage. Now we have new meaning to the word 'inheritance'! Not only does the next generation inherit the property but they also inherit the debt!

Generally, Canadians are a conservative bunch, but it is just a matter of time before we have the 'never pay it off' mortgage.

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