Amortization is how long it takes to pay off your mortgage in full. Most Canadians choose 25 years. A 30-year amortization lowers your monthly payment, but you pay more interest over time. Here is when it makes sense.
What is a 30-year amortization?
It spreads your mortgage over 30 years instead of 25. Each payment is smaller, but you make more of them, so the total interest is higher.
If you put 20% or more down, 30-year amortizations have been available for a long time. Since December 15, 2024, insured mortgages (less than 20% down) can also use a 30-year amortization for first-time buyers and for anyone buying a newly built home.
What are the benefits?
- Lower monthly payments. Helpful for first-time buyers and in pricey markets.
- Easier to qualify. A smaller payment can help you qualify for a larger mortgage.
- More breathing room. Extra cash each month for savings, child care or other costs.
What are the downsides?
- More interest. You pay noticeably more over the life of the mortgage.
- Slower equity. You pay down the loan more slowly at the start.
- Easy to get comfortable. A low payment can make it easy to forget the long-term plan.
When does it make sense?
- First-time buyers who need a manageable payment to get started
- Higher-priced areas where a 25-year payment is a stretch
- People expecting higher income soon, who want room now
- Investors who want better monthly cash flow on a rental
How to get the best of both
Take the 30-year amortization for the lower required payment, then use your prepayment privileges when you can. Extra payments or a small payment increase each year can cut years off the mortgage and save a lot of interest. See our guide to prepayment privileges.
For realtors
Knowing that a 30-year amortization is an option can help your buyers see what they can afford. If a client is close to qualifying, have them talk to us early so we can compare 25 and 30 years side by side.
Talk to us
Want to see the payment difference on your own numbers? Book a call or phone 289-723-2126.
Common questions
Who can get a 30-year amortization in Canada?
Anyone with 20% or more down can usually get one. Since December 15, 2024, first-time buyers and buyers of newly built homes can also get a 30-year amortization on an insured mortgage.
Does a 30-year amortization cost more?
Yes. Your monthly payment is lower, but you pay more interest over the life of the mortgage because you take longer to pay it off.
Can I pay off a 30-year mortgage faster?
Yes. Most mortgages let you make extra payments or raise your payment each year. Using these can shorten your mortgage by years.