A Canadian mortgage has two time periods that are easy to mix up. The term is how long your current contract, with its rate and conditions, lasts: usually somewhere between six months and ten years. The amortization is how long it would take to pay the whole mortgage off at the current payment: usually 25 or 30 years. Because the term is so much shorter, you renew several times before the mortgage is paid off. This guide is part of our mortgage types hub.
Term vs amortization at a glance
| Mortgage term | Amortization period | |
|---|---|---|
| What it is | The length of your current contract with the lender | The total time to pay the mortgage off |
| Typical length | 6 months to 10 years | 25 or 30 years |
| What it sets | Your interest rate, rate type, prepayment privileges and penalties | The size of your regular payment and how much interest you pay overall |
| When it ends | At the maturity date, when you renew or pay off the balance | When the balance reaches zero |
| Can it change? | A new term is chosen at each renewal | It can be shortened with prepayments, or changed at renewal or on refinancing, within the lender’s limits |
How they fit together
A $500,000 mortgage with a 25-year amortization and five-year terms would look like this if every term were renewed for five years:
| Year | Term | Amortization remaining |
|---|---|---|
| 0 | First 5-year term begins | 25 years |
| 5 | Renew for a second 5-year term | 20 years |
| 10 | Renew again | 15 years |
| 15 | Renew again | 10 years |
| 20 | Renew again | 5 years |
| 25 | Mortgage paid off | 0 years |
That is five terms over one 25-year amortization. At each renewal the rate is reset to whatever the lender offers then, so the payment needed to stay on the 25-year schedule changes too.
Choosing a term
The term decides how long your rate is locked and how much it would cost to get out early. Shorter terms renew more often; longer terms lock in the rate longer and generally carry larger penalties if broken.
| Term | What it suits |
|---|---|
| 6 months to 1 year | A short commitment, for example if you expect to sell, or want to renew soon |
| 2 to 3 years | More frequent chances to renew at a new rate, with less time locked in |
| 5 years | A longer stretch of payment certainty without the longest lock-in |
| 7 to 10 years | The longest payment certainty, if the lender offers these terms |
The 3-year vs 5-year comparison looks at the most common term decision in detail, and the fixed vs variable comparison covers the rate-type choice that comes with every term. A closed term limits how much you can repay early; open vs closed mortgages explains the alternative. Breaking a closed fixed-rate term early usually costs more than breaking a variable one; the mortgage penalty guide shows how lenders calculate it. Current rates for each term are on our mortgage rates page.
Some situations that tend to point one way or the other:
| Situation | Often considered |
|---|---|
| Might sell, move or refinance within a few years | A shorter term or a variable rate, to keep penalty exposure down |
| Expect to stay put and want predictable payments | A 5-year fixed term |
| Expect rates to fall | A shorter term or variable rate |
| Expect rates to rise | A longer fixed term |
| A life event is coming (job change, retirement) | A term that ends around that date |
Choosing an amortization
The amortization decides the payment. A shorter amortization means higher payments but less interest; a longer one means lower payments and more interest. On a $500,000 mortgage at 5%:
| Amortization | Monthly payment | Total interest |
|---|---|---|
| 15 years | $3,941 | $209,311 |
| 20 years | $3,286 | $288,550 |
| 25 years | $2,908 | $372,407 |
These assume the rate stays at 5% for the whole amortization and use the Canadian convention for fixed-rate mortgages, semi-annual compounding. Whether to stretch to 30 years is a decision of its own: the 25 vs 30-year amortization comparison sets out the payment and interest difference, and the 30-year amortization rules explain who can get 30 years on an insured mortgage. Amortizations beyond 30 years are covered in extended amortization.
With less than 20% down, the insured-mortgage rules cap the amortization at 25 years, or 30 for first-time buyers and new builds. With 20% or more down, the lender sets the limit.
Start long, pay short
A common approach is to choose a longer amortization for the lower required payment, then pay more than required using the prepayment privileges in a closed mortgage. The extra payments shorten the actual payoff time, and if money gets tight you can fall back to the required payment. Paying off a mortgage early covers the options.
At renewal
Each renewal is a chance to change several things at once:
| Item | Can it change at renewal? |
|---|---|
| Lender | Yes, by switching |
| Term length | Yes |
| Rate type (fixed or variable) | Yes |
| Amortization | Yes, within the lender’s limits |
| Prepayment privileges | Yes, as part of the new contract |
Lengthening the amortization at renewal to lower the payment is covered in mortgage amortization extension, and the wider renewal process in the mortgage renewal guide.
Related resources
Sources
The figures and rules on this page come from these sources, last checked against them between September 25, 2026 and October 2, 2026. How we check facts.
- Bank of Canada: Mortgage rates, fixed 5 years and over: uninsured residential mortgages, funds advanced (data series)
- CMHC: CMHC Purchase
- Department of Finance Canada: Boldest mortgage reforms in decades come into force today
- Financial Consumer Agency of Canada: How much you need for a down payment
- Justice Laws (Canada): Interest Act