Amortization.
Mortgage amortization refers to the length of time it takes to pay off a mortgage in full. During this time, you’ll gradually reduce your loan balance through regular payments.
Mortgage amortization periods can vary. Typically, the amortization period is 25 years, however, shorter and longer timeframes may be available depending on the amount of your initial down payment. If your down payment is less than 20% of the home’s total cost, the longest allowable amortization is 25 years.
Shorter amortization periods (e.g., 15 years) result in less interest paid overall, however, your monthly payments will be significantly higher. Longer amortization (e.g., 25 years), helps spread out the payments for a longer period, making them more manageable, however, you’ll pay more interest over the loan’s lifespan.
Amortization period options.
Amortization schedule
You’ll get an amortization schedule that breaks down your payments over the years, including how much of each payment will go towards interest vs. the principal balance owing.
Loan repayment
Part of each payment will go towards the interest gained on the outstanding balance, while the remainder of your payment will reduce the principal amount owing.
Interest vs. principal
As you begin paying off your mortgage, a larger portion of your payment will go towards interest. As your loan matures, the balance shifts and more of your payment will directly reduce the principal.
Want to be mortgage-free sooner? Here's how.
For many homeowners, the ultimate goal is to be mortgage-free. Even if you initially opt for a longer amortization period to qualify for your mortgage, there are a few strategies that can help you accelerate the process.
Accelerated payments:
By choosing an accelerated repayment option, you can make the equivalent of one extra payment per year. This can shave years off the total life of your mortgage loan (in some cases shortening your amortization period by up to 10 years!).
Extra payments:
Some mortgages allow you to make an extra lump sum payment each year. Consider using money from a bonus or tax return to make an extra payment on your mortgage, which will go straight to your principal amount and reduce your amortization period.
Round up your payments:
Round your mortgage payment to the nearest whole dollar. For example, if your monthly payment is $1036.57, consider increasing it to $1050.00. This small amount will go directly to your principal and even a minor increase can make a significant difference over time.
Keep your payment the same:
When renewing your mortgage term at a lower interest rate, it’s tempting to reduce your payments. However, consider keeping your current payment amount the same to help pay down the principal more quickly.
Tools to help you plan your mortgage.
Common questions.
Here’s what people ask us the most.
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Your mortgage term is the length of your current mortgage contract with us. It’s the period you’ve committed to specific terms such as interest rate, type of mortgage, etc. When your term ends, you’ll need to renew or renegotiate your mortgage. Terms range anywhere from six months to five years or more.
Your amortization period is the total lifespan of your mortgage – the amount of time it will take you to pay off your entire mortgage.
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If your down payment is less than 20% of the home’s purchase price, your mortgage requires default insurance and the maximum amortization is generally 25 years. However, effective December 15, 2024, the federal government expanded 30-year amortizations for insured mortgages to all first-time homebuyers and to all buyers of newly built homes. Speak with a Conexus Advisor to confirm what’s available for your situation.
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A longer amortization period can lower your regular mortgage payments by spreading them out over a longer time. However, you’ll typically pay more interest over the life of your mortgage. A shorter amortization period can help you become mortgage-free sooner but usually means higher payments.
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The right amortization period depends on your goals and budget. A shorter period can help you save on interest and pay off your mortgage sooner, while a longer period may provide more manageable payments. A Mobile Mortgage Specialist or Financial Advisor can help you find the right balance for your situation.
Let’s find your perfect timeline.
Choosing the right amortization period is about balancing today’s budget with tomorrow’s goals. Our Mobile Mortgage Specialists and Financial Advisors will help you weigh the trade-offs, run the numbers and build a repayment plan that gets you mortgage-free on your terms.
