Mortgage Term vs Amortization in Canada: How Long They Last

Published 2 November 2026 · By Jatin Dua, Broker of Record, RE/MAX Quantum Realty

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By Jatin Dua · Broker of Record, RE/MAX Quantum Realty · Updated 2 November 2026 · 9 min read — The term is how long your mortgage contract lasts; amortization is how long the whole loan takes to repay. Here is how both work in Canada in 2027.

Short answer

In Canada, the amortization is the total time to pay off the loan, usually 25 years and up to 30 for some buyers. The term is how long your current contract, rate and conditions last, from a few months to 10 years, most often five years or less. Most homeowners renew several terms before the mortgage is gone.

This guide is for home buyers in Ontario and across Canada who want to understand how long a mortgage really lasts and how the term and amortization choices change their payments. You will get plain definitions, the 2027 rules on maximum amortization, worked payment examples and what happens at renewal.

What is the difference between a mortgage term and amortization?

They are two different clocks running on the same loan.

Amortization is the total time it would take to pay off the whole mortgage, if you keep making the planned payments. The Financial Consumer Agency of Canada (FCAC) points out it is an estimate, because it assumes today’s rate holds.
The term is how long your current mortgage contract is in effect. During the term, your interest rate, rate type (fixed or variable) and conditions are locked in. When the term ends, you renew, refinance or pay off the balance.

Example: you take a 25-year amortization with a 5-year term. After five years, you still owe most of the loan. You sign a new term for the remaining 20 years, at whatever rate is on offer then. Over the life of the mortgage, you may go through five or more terms.

How long are mortgages in Canada?

There are two honest answers:

The whole mortgage: CMHC’s home buying guide says amortization is usually 25 years. CMHC’s mortgage calculator notes that amortization typically runs 25 to 30 years.
Each contract: FCAC says most Canadian mortgages have terms of five years or less. CMHC’s guide says terms can run anywhere from 6 months to 10 years.

So when a friend says they “got a five-year mortgage,” they almost always mean a five-year term on a 25- or 30-year amortization.

What mortgage term lengths can you choose?

Lenders offer a range of terms. FCAC groups them like this:

Term type	Length	What FCAC says to know
Short-term	5 years or less	Most Canadian mortgages; fixed or variable rate available
Long-term	More than 5 years (up to 10 per CMHC)	Usually fixed rate only; possible large penalty if you sell in the first 5 years
Convertible	Short term	The lender may let you convert to a longer term, which changes your rate

Source: Financial Consumer Agency of Canada, Mortgage terms and amortization; CMHC, Homebuying Step by Step (2026).

The term also decides your rate type. A fixed rate stays the same for the whole term. A variable rate moves with your lender’s prime rate. After the Bank of Canada raised its policy rate to 2.50% on 28 October 2026, the big banks raised prime from 4.45% to 4.70%, so variable-rate borrowers saw their rate rise by 0.25 points. My guide on whether to lock in a variable mortgage covers that choice.

What is the maximum amortization in Canada in 2027?

The limit depends on your down payment and who you are:

Your situation	Maximum amortization
Less than 20% down, first-time buyer	30 years
Less than 20% down, buying a newly built home	30 years
Less than 20% down, all other buyers	25 years
20% or more down	Set by your lender (often up to 30 years)

Source: FCAC, Mortgage terms and amortization; CMHC mortgage calculator. Rules as of November 2026.

A mortgage with less than 20% down must be insured, and insured mortgages are only available on homes priced below $1.5 million. Choosing 30 years on an insured mortgage adds 0.20% to the CMHC premium. My guide to getting a 30-year mortgage in Ontario explains who qualifies and what it costs.

How does a 25-year vs 30-year amortization change your payment?

A longer amortization lowers your monthly payment, but you pay off the loan more slowly and pay more interest overall. Here is a $500,000 mortgage at an example fixed rate of 4.50%, using the semi-annual compounding Canadian fixed-rate mortgages use:

$500,000 at 4.50%	25-year amortization	30-year amortization
Monthly payment	$2,767	$2,521
Balance owing after a 5-year term	$438,982	$455,502
Principal paid in the first 5 years	$61,018	$44,498
Total interest if the rate never changed	$330,209	$407,588

Source: My calculation. Rate is an illustration, not a quote; real rates change at each renewal.

The 30-year option frees up about $246 a month, but you owe about $16,500 more at your first renewal. FCAC’s own example shows the same pattern: on $300,000 at 4%, total interest is about $63,900 over a 10-year amortization and about $173,400 over 25 years. A longer amortization can still be the right call if it keeps your budget safe, as long as you plan to pay extra when you can.

Free tool — what can you actually afford?

What happens when your mortgage term ends?

The last day of your term is called the maturity date. CMHC says that on that day the loan must be paid in full, renegotiated or renewed. FCAC says federally regulated lenders, such as banks, must send you a renewal statement at least 21 days before the term ends. That statement shows your balance, the rate, the payment schedule, the term and any fees.

FCAC also warns that if you do nothing, your mortgage may renew automatically, and not always at the best rate. Start shopping a few months before maturity. Another lender may offer a better rate, but they must approve you and may use different criteria. If you extend your amortization or borrow more, you may need to pay a new mortgage insurance premium.

Your renewal rate changes your payment. Here is the 25-year example above, renewing after five years with 20 years left on $438,982:

Renew at 3.50%: about $2,540 a month
Renew at 4.50%: about $2,767 a month
Renew at 5.50%: about $3,004 a month

That is why a term is a bet on rates, while amortization is a choice about budget. See my guide to mortgage renewal options in 2027 and the rules on switching lenders at renewal.

Is a 10-year mortgage term worth it?

A 10-year term gives you a long stretch of payment certainty. FCAC notes these longer terms are usually fixed-rate and that you may face a large prepayment penalty if you sell or break the mortgage in the first five years.

After year five, a federal law helps. Section 10 of the Interest Act says that when a mortgage runs longer than five years, the borrower can pay it off any time after the five-year mark by paying the balance plus three months’ extra interest. The rule does not apply to mortgages given by corporations. So on a 10-year term, the most you would pay to leave after year five is generally three months’ interest.

Watch out

Breaking a closed mortgage before the term ends can cost thousands of dollars, FCAC warns, and longer fixed terms carry the biggest risk. Ask each lender how it calculates the penalty, and get it in writing before you choose a term. My guide to mortgage prepayment penalties shows how it works.

Should you pick a short or long mortgage term in 2027?

No one can promise where rates go next. As of November 2026, the Bank of Canada has just raised its policy rate to 2.50%, its first increase in more than three years, and the Governor said a further increase could be needed. Its next decision is 9 December 2026. Fixed rates follow bond yields rather than the policy rate, and yields rose through September and October 2026. These are the facts; the direction from here is a forecast.

A shorter term, or a variable rate, suits buyers who expect to move, sell or pay down a large amount soon, and who can handle a payment rise. A longer fixed term suits buyers who want a stable payment and plan to stay. If you might sell within a few years, the penalty to break a long term matters more than a small rate difference.

My take

Choose your amortization based on a payment you can carry even if rates rise at renewal. Then choose the term based on how long you will realistically stay in the home. Many of my clients take a 30-year amortization for breathing room and then use prepayment privileges to pay it down faster. That keeps the safety net without paying for 30 full years.

How can you pay off your mortgage faster than the amortization?

Your amortization is a maximum, not a sentence. CMHC describes these options:

Accelerated payments: weekly or every-two-weeks accelerated schedules add up to more paid each year.
Prepayment options: many mortgages let you make extra payments, raise your payment, or pay a lump sum each year without penalty, up to a limit.
New choices at renewal: CMHC notes that when the term is up you can renegotiate and pick the same or different options, such as a shorter remaining amortization if the payment fits.

Check your prepayment limits before you sign. They vary a lot between lenders. If you are still deciding how much you can borrow, my guide to the mortgage stress test shows how qualifying works.

What to do next

Decide the highest monthly payment you can carry, even if rates rise at your first renewal.
Check which maximum amortization applies to you: 25 or 30 years.
Ask each lender for rates on several terms, plus the prepayment privileges and penalty method for each.
Mark your maturity date and start shopping a few months before it, without waiting for the renewal letter.
Use prepayments or accelerated payments to shorten the amortization when your budget allows.

Need help with this? Talk to me.

I’m Jatin Dua, Broker of Record at RE/MAX Quantum Realty, and I’m the best agent to do this kind of work for you in Toronto and across the GTA. Over $100 million in GTA sales and 100+ families helped sell. Feel free to contact me any time: call or text 833-330-1925 or email [email protected].

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Frequently asked questions

How long are most mortgages in Canada?

Most Canadian mortgages are amortized over 25 years, and some buyers can choose 30. The contract itself, called the term, is usually five years or less, according to the Financial Consumer Agency of Canada. That means a typical homeowner signs several terms, renewing every few years, before the mortgage is fully paid off.

What is the difference between mortgage term and amortization in Canada?

The amortization is the total time to pay off the whole loan, usually 25 or 30 years. The term is how long your current contract, rate and conditions last, typically one to five years and up to 10. When the term ends you renew or switch lenders, while the amortization keeps counting down.

Can I get a 30-year amortization in Canada in 2027?

Yes, in some cases. With less than 20% down, first-time buyers and buyers of newly built homes can choose up to 30 years; other insured buyers are limited to 25. With 20% or more down, the lender sets the maximum, often 30 years. A 30-year insured mortgage adds 0.20% to the CMHC premium.

What happens at the end of a 5-year mortgage term?

At the end of a 5-year term you must renew, switch to another lender, or pay off the balance. In Canada, federally regulated lenders must send a renewal statement at least 21 days before the term ends. FCAC warns that some mortgages renew automatically if you do nothing, so shop around a few months ahead.

Is a longer amortization a bad idea?

Not always. A longer amortization lowers your payment but adds interest. On a $500,000 mortgage at an example 4.50%, a 30-year amortization costs about $246 a month less than 25 years, but about $77,000 more in total interest if the rate never changed. Paying extra when you can reduces that cost.

What is the longest mortgage term in Canada?

CMHC says mortgage terms in Canada run from 6 months to 10 years, so 10 years is the longest common term. Longer terms are usually fixed-rate. Under section 10 of the federal Interest Act, on a mortgage longer than five years you can repay after year five by paying three months’ extra interest.

Can I change my amortization when I renew my mortgage?

Yes. At renewal you can usually choose a shorter remaining amortization to pay the loan off faster, if the higher payment fits your budget. Extending the amortization is also possible with some lenders, but FCAC warns it adds interest and may require a new mortgage insurance premium if your mortgage is insured.

Is a 5-year or 10-year mortgage term better in 2027?

It depends on how long you will stay and how much payment certainty you need. A 10-year fixed term protects you longer, but FCAC notes it can carry a large penalty if you leave in the first five years. A 5-year term costs less to break. As of November 2026, rate forecasts differ, so compare both.

Do I have to renew my mortgage with the same lender in Canada?

No. When your term ends you can renew with your lender or move to another one. FCAC says a new lender must approve your application and may use different criteria, and switching can involve setup, appraisal or administration fees. Start comparing offers a few months before your maturity date rather than waiting for the renewal letter.

Mortgage Term vs Amortization in Canada: How Long Mortgages Really Last