For example, a 15 year loan of $430,000 at 4% interest, will cost you $142,518 in total interest paid and $3,181 in monthly repayments. A similar loan over 25 years will nearly double your interest to $250,909 and drop your monthly repayments to $2,270.
When making a decision about the loan term, think first about your financial plan and how much you can afford to spend on mortgage repayments. What level of payment can you sustain into the future? Do you have any other high-cost forms of debt? What emergency savings can you fall back on if required?
An option we sometimes suggest is to choose a loan that allows additional repayments at no fee. This allows you to select a loan with a longer term but if you are disciplined you can pay it off as if you had a shorter term.
Contact us today to find out what options are available for your individual situation.