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Wells Fargo Financial Corp. Canada is stretching out the amortization period for some of its home mortgages to 40 years.

Richard Valade, president of Wells Fargo Financial Canada, expects the lengthy payment schedule to appeal to buyers in cities where house prices are lofty. Vancouver, for example, has the highest home prices in Canada, while Calgary has seen the average price skyrocket 44 per cent in one year, to $358,214 at the end of May.

"The longer amortization period reduces the monthly payment, making it more affordable for buyers and increasing their monthly cash flow," Mr. Valade says.

He adds that it's easier for consumers to qualify for the 40-year mortgage.

In April, GE Money said the popularity of mortgages with 30-year amortization periods prompted it to allow homeowners to stretch their payments over 40 years.

The long-term financing is designed to appeal to aspiring buyers who worry about being squeezed out of the real estate market as prices escalate, president Rick Lunny said.

GE Money, the Canadian consumer-lending arm of General Electric Co., introduced 30-year mortgages last year. The offering has been so well accepted, Mr. Lunny says, it now accounts for about half of GE Money mortgages in Canada.

Using the example of a $250,000 home, Mr. Lunny said the monthly payment on a traditional 25-year mortgage is $1,600. With a 40-year mortgage, that payment drops to $1,360.

Mr. Lunny said he expects most people who take out a 40-year mortgage would try to pay it off in less time, but the lower monthly payments offer more flexibility.