Mortgage Amortization: Choosing the Right Length for You

Choosing an amortization period for your mortgage—or wondering if yours should change—has a significant impact on your payments and total costs over the life of your mortgage. Here's how to make the right choice.

What Is Amortization?

Amortization is the total length of time to pay off your mortgage completely. In Canada, the maximum is typically 25-30 years depending on your down payment.

Important: Don't confuse amortization with term. Your term (typically 5 years) is when you renegotiate. Amortization is the full payoff timeline.

Common Amortization Periods

25 Years (Standard)

• Required for high-ratio mortgages
• Balanced payment vs. interest cost
• Most common choice

30 Years

• Available with 20%+ down payment
• Lower monthly payments
• Higher total interest paid

Shorter Periods (15-20 Years)

• Higher monthly payments
• Significant interest savings
• Builds equity faster

Payment Comparison

For a $500,000 mortgage at 5%:

30 years costs $93,800 more in interest than 25 years.

Need Help Choosing?

Get personalized advice on the right amortization for your goals.

Factors to Consider

Choose Longer Amortization If:

• Cash flow is tight
• You have other high-interest debt
• You want flexibility for life changes
• You'll invest the payment difference wisely

Choose Shorter Amortization If:

• You want to be mortgage-free sooner
• You can comfortably afford higher payments
• Minimizing interest is a priority
• You're closer to retirement

The Best of Both Worlds

Consider these strategies:

Choose Longer, Pay Shorter

Get a 30-year mortgage but make payments as if it's 25 years. You have flexibility if things get tight.

Use Prepayment Privileges

Make lump sums when possible. Even small extra payments add up.

Accelerated Payments

Bi-weekly instead of monthly equals one extra payment per year.

Impact at Renewal

At renewal, you can:

• Extend amortization (if equity allows)
• Shorten amortization (if income allows)
• Maintain original schedule
• This flexibility is valuable

FAQ

Q: Can I change amortization mid-term?
A: Not usually without refinancing. At renewal, you can adjust.

Q: Does longer amortization affect rate?
A: Sometimes. Some lenders have slightly higher rates for 30-year amortizations.

Q: Is 30-year amortization ever a good choice?
A: Yes, if you need the cash flow flexibility or have other investment priorities.

Q: What if I can only qualify with 30 years?
A: Use it to get into the market. Increase payments or shorten amortization later.

What's Next

Get personalized advice on the right amortization for your budget, goals, and timeline.