Products and terms
Amortization
The total time it would take to pay your mortgage down to zero at your current payment, usually 25 or 30 years in Canada.
Amortization is the full repayment period of your mortgage. The term is something else: it's how long your current contract and rate last. A typical Canadian mortgage has a 25-year amortization and a 5-year term, so you'll renew about 4 more times before the mortgage is paid off.
The maximum amortization on an insured mortgage is 25 years, with one exception. Since December 2024, first-time buyers and buyers of newly built homes can take 30 years, at an extra 0.20% on the default insurance premium. On uninsured mortgages, 30 years is common and some lenders go to 35.
A longer amortization lowers your payment and raises your total interest, and the interest side is bigger than most people expect. Stretching a $500,000 mortgage from 25 years to 30 lowers the monthly payment by a couple of hundred dollars and adds roughly $100,000 of interest over the life of the loan. Treat it as a cash-flow tool, and choose it on purpose when you need the lower payment.
Related terms
Term
How long your current mortgage contract and rate last, usually 1 to 5 years, which is different from the amortization.
Prepayment privilege
How much a closed mortgage lets you pay down each year without a penalty, typically 10% to 20% plus a payment increase.
Trigger rate
On a fixed-payment variable mortgage, the rate at which your payment stops covering the interest and the balance starts growing.
This definition describes how the term is used in Canadian residential mortgage lending. It’s general information, not advice on your file. Rules, thresholds and rates change. Where a figure is quoted, it’s current as of the date shown on the related guide.
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