I Love this topic — it’s one of the most misunderstood parts of mortgages in Canada. I’ll write this in a clean, educational, and in simple terms for you guys.
Mortgage Term vs. Amortization in Canada: What’s the Difference?
When it comes to mortgages in Canada, two terms get mixed up all the time:
Mortgage Term and Amortization Period
They are not the same thing.And understanding the difference can save you thousands of dollars — and a lot of stress.Let’s break it down.
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What Is a Mortgage Term?
Your mortgage term is the length of your contract with the lender.
It’s how long:
• Your interest rate is locked in
• Your payment structure is set
• Your mortgage conditions apply
Most mortgage terms in Canada range from:
• 6 months
• 1 to 5 years (most common)
• Up to 10 years (generally the longest regularly available fixed term from major lenders)
At the end of your term, your mortgage isn’t paid off — it simply renews at current rates and conditions.
Think of the term as the “chapter” in your mortgage story — not the whole book.
What Is the Amortization Period?
Your amortization period is the total time it would take to fully pay off your mortgage if you made only your scheduled payments.This is your payoff timeline, not your rate timeline.
Standard Maximums in Canada:
• 25 years → For most insured mortgages (down payment under 20%)
• 30 years → Now widely available for many borrowers, including:
• First-time homebuyers
• Buyers of newly built homes(Rules expanded in late 2024)
The longer the amortization:
• Lower monthly payments
• Higher total interest paid over time
Shorter amortization:
• Higher monthly payments
• Less total interest
• Faster equity growth
What’s the Longest You Can Amortize in Canada?
For most Canadians today:
30 years is the longest widely available amortization through major lenders.
You may hear about longer amortizations like:
• 35 years
• 40 years
These are typically:
• Offered by alternative or private lenders
• More expensive
• Stricter qualification
• Not standard bank products
And no — Canada does not currently offer standard 50-year amortizations through banks or regulated insurers.
A Note About 60–90 Year Amortizations
You may have seen headlines about mortgages stretching to 60, 70, even 90 years. These are not intentional products. They can temporarily appear on some variable-rate mortgages when:
• Interest rates rise significantly
• Payments stay fixed
• More of the payment goes toward interest than principalWhen those mortgages renew, lenders typically require the amortization to reset to a reasonable schedule. So no — banks are not handing out 90-year mortgages.
Why This Matters
Understanding the difference helps you:
• Choose the right strategy
• Manage risk properly
• Align payments with your long-term wealth plan
• Avoid surprises at renewal
Because focusing only on the rate — without understanding term and amortization — is like choosing a vehicle based only on the paint colour.It looks good today. But it may not drive the way you need it to.
Quick Summary
Mortgage Term = Your contract length (typically up to 10 years)
Amortization Period = Your full payoff timeline (up to 30 years with most lenders)
35–40 years = possible through alternative financing
50-year mortgages = not standard in Canada
Are you curious about mortgages, or simply want to talk mortgages? Reach out! I'd love to hear from you!!!