Twenty-five years: the conventional norm
Thirty years: common on residential buildings
Forty years: possible with insurance, on some projects
What the length changes
A longer amortization lowers the monthly payment. It raises total interest paid.
The effect on qualification
A lower payment improves the coverage ratio. That can unlock a higher amount.
What is available
- Twenty-five years: the conventional norm
- Thirty years: common on residential buildings
- Forty years: possible with insurance, on some projects
The gap in numbers
On a five hundred thousand dollar loan, five more years lighten the payment.
They add tens of thousands of dollars in interest, however.
When to choose the longer term
- When the coverage ratio is tight
- When you plan other acquisitions
- When rents are still below market
- When you want to preserve cash
Shortening later
Permitted prepayments shorten the amortization without changing the contract.
What the lender accepts
The amortization offered depends on the building’s age and condition.
An older building rarely gets the longest term.
Ask before building your calculation on thirty years.
Revisiting it at renewal
The amortization is renegotiated at each term maturity.
You can shorten it if income has grown.
That decision uses today’s figures, not those from the start.
