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with Canada and Independence Day coming up let's talk about the differences between Canadian and U.S mortgages mortgage interest deductibility in the U.S homeowners can deduct mortgage interest payments from their taxable income in Canada mortgage interest is generally not tax deductible for personal residences however there may be some tax advantages for investment properties in Canada mortgage insurance in Canada mortgage insurance is mandatory for home buyers who have down payments of less than 20 percent of the purchase price the minimum you can put down in Canada is five percent most people have heard of cmhc but there are three companies that offer default Insurance including cmhc sagin and Canada guarantee this insurance protects the lenders against defaults in the U.S private mortgage insurance or PMI is required for borrowers who put down less than 20 of the homes value however mortgage insurance is also available through government-backed programs like the FHA and the VA amortization periods in Canada the maximum standard period for insured mortgages is 25 years for uninsured or private it can go up to 30 and sometimes 35 years in the U.S 30 and 15-year mortgages are common although there are other options available in Canada we have shorter terms usually between 6 months and 10 years which are renewed throughout the amortization period the most common term is five years at the end of the term you can pay off your mortgage renew with a current lender or switch to a new lender you can also renegotiate your interest rate at that time prepayment penalties in the U.S only some mortgages have penalties for paying off the loan early or for making significant prepayments Canadian mortgages typically only allow limited prepayments without penalties such as 20 percent of the mortgage balance per year and there you have it those are the differences between U.S and Canadian mortgages happy Canada day and happy Independence Day