Amortization
The total time it would take to pay off your mortgage at your current rate and payment, usually much longer than your rate term.
Amortization is the length of time it would take to pay off your mortgage completely. It is an estimate based on your current interest rate and payment. Each payment covers interest and reduces the principal. If your rate or payment changes, the time needed to pay off the loan changes too.
Amortization is different from the mortgage term. The term is how long your current mortgage contract, including its interest rate, is in effect. Terms usually run from a few months to five years or more. Most Canadian mortgage holders have a term of five years or less. At the end of each term you renew, so most borrowers go through several terms before the mortgage is paid off.
When your down payment is less than 20%, the maximum amortization is 25 years in most cases. Since December 15, 2024, first-time buyers and buyers of newly built homes can get up to 30 years on an insured mortgage. CMHC adds a 0.20% surcharge to the insurance premium for that longer amortization. With a down payment of 20% or more, your lender sets the maximum.
A longer amortization lowers your regular payment but raises the total interest you pay. The Financial Consumer Agency of Canada gives an example of a $300,000 mortgage at 4%. Total interest is about $135,000 over 20 years and about $173,000 over 25 years. Those extra five years add roughly $38,000 in interest.
Amortization also affects how much you can borrow. Lenders use it to calculate your payment and debt ratios, so a longer period means a lower payment for the same loan. Extra payments allowed under your contract reduce the principal faster, which shortens the time to pay off the loan. If you reach the trigger rate on a fixed-payment variable mortgage, your lender may offer to extend the amortization instead.
Sources
- FCAC: Mortgage terms and amortization
- Department of Finance: Delivering the boldest mortgage reforms in decades
- CMHC: CMHC revises homeowner mortgage loan insurance premiums (June 2024)
- FCAC: Managing your money when interest rates rise
Last reviewed October 16, 2026.
Go deeper
Related terms in Mortgage & Buying
- Closing Costs The one-time fees beyond your down payment needed to complete a home purchase, often 1.5% to 4% of the price.
- CMHC Mortgage Default Insurance Insurance that protects your lender if you stop paying, and is usually required when your down payment is less than 20% of the price.
- First Home Savings Account A registered account for first-time buyers: deductible contributions of $8,000 a year up to $40,000, and tax-free withdrawals for a home.
- Fixed vs Variable Rate A fixed rate stays the same for your whole mortgage term, while a variable rate moves up or down with your lender's prime rate.
General information only, not legal, tax, or financial advice. Rules change and vary by province; confirm the current details with the relevant authority before you rely on them.