Mortgage Amortization in Canada

What is an amortization period?

The mortgage amortization is the period of time over which ta mortgage will be paid off. The maximum mortgage amortization period is 25 years for CMHC insured mortgages and 35 years for non-CMHC insured mortgages. A CMHC mortgage is generally one where the home purchaser has a down payment of less than 20% of the purchase price. The standard amortization period is normally 25 years, however, a borrower may choose any period as long as it’s within the limit (i.e. 7 years, 22 years, etc.) and according to the lender's mortgage product restrictions.

The mortgage amortization period assumes that the mortgage rate and payments remain constant over the life of the mortgage. In actuality, a mortgage will have to be renewed several times over its life, likely at different rates. Furthermore, payment frequency and amount could change depending on a change in your financial position. All these factors would adjust the amortization period.

The longer the mortgage amortization period is, the smaller the mortgage payments, given that the payoff of the mortgage is spread over a longer period of time. However, a longer amortization period will also result in more interest paid over the life of the mortgage compared to a shorter amortization period since less of the principal will be paid off with each payment.