Genworth Financial Canada today announced it would begin insuring 30- and 35-year mortgage loans. This new option helps more Canadian home buyers gain a foothold in competitive real estate markets.

With such an extended mortgage amortization period, buyers could reduce their monthly payments by as much as $300 per month on a $400,000 loan at 6% interest. The principal and interest payment would be $2,559 on a 25-year mortgage, $2,379 on a 30-year mortgage and $2,261 on a 35-year mortgage.

“In 2005, house prices across Canada increased by an average of 9.8%. In some communities affordability has been stretched,” said Peter Vukanovich, president of Genworth Financial Canada, in a release. “Insuring mortgage loans with extended amortization periods will enable buyers to keep monthly costs affordable even as both interest rates and home prices continue to rise.”

Genworth makes low down payment loans possible by protecting mortgage lenders against the risk of borrower default. Insurance for loans under the new 30- and 35-year mortgage amortization program will include a 0.20% premium surcharge for every five years of amortization beyond the traditional 25-year mortgage period.

The new 30- or 35-year amortization option gives homebuyers the flexibility of reducing their monthly mortgage payments for the initial years of homeownership while managing overall interest cost over the life of a mortgage. They can reduce the number of years it takes to pay off their mortgage, and the interest paid, by choosing bi-weekly mortgage payments, increasing monthly payments over time, and taking advantage of lump sum pre-payments.

Genworth will offer the extended amortization feature on selected insurance products.