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A mortgage runs on two clocks. The amortization is how long the whole loan takes to pay off, usually 25 years, and the term is how long your rate and conditions last before renewal, often 5 years. On a $520,000 loan at 4.6%, a 25-year amortization costs $2,907 a month and a 30-year one costs $2,652 (our engine’s figures).
What is the difference between amortization and term?
Amortization is the repayment schedule built into your payment. The term is the contract you’re in right now. When a 5-year term ends you renew at whatever rates are on offer, and the amortization keeps counting down from where it was. Stretching the amortization lowers the payment and raises the interest, as the same $520,000 loan shows.
| Amortization | Monthly payment | Total interest over the full schedule |
|---|---|---|
| 25 years | $2,907 | $352,111 |
| 30 years | $2,652 | $434,812 |
That buys $255 a month of breathing room at a cost of $82,701 in extra interest. Whether it’s worth it depends on what else you’d do with the $255. You can try your own figures in the mortgage amortization calculator.
Fixed, variable or adjustable: what changes and what doesn’t?
With a fixed rate, the rate and the payment stay put for the term. With a variable rate, the rate moves with the lender’s prime rate, but many lenders hold the payment steady and let the split between interest and principal shift. With an adjustable rate, the payment itself changes whenever prime does. The names aren’t standardized, so read your own contract before assuming which one you have.
A steady payment on a variable rate has a catch. When rates climb, most of the payment can turn into interest. Lenders write a trigger point into the contract for that situation, and it’s worth asking what yours is. The fixed vs variable mortgage calculator compares the two over a term.
What does open or closed mean?
An open mortgage lets you pay off any amount at any time without a penalty. A closed mortgage doesn’t. Open mortgages carry higher rates, so they suit someone about to sell or expecting a lump sum. Most people choose closed, which allows limited prepayments (more on those below) and charges a penalty if you break the contract.
What are insured, insurable and uninsured mortgages?
A mortgage is insured when the borrower paid default insurance, which is required if the down payment is under 20%. The federal minimum is 5% of the first $500,000 and 10% of the portion above that, and insurance isn’t available at $1,500,000 or more, where you need 20% down. The Financial Consumer Agency of Canada: down payment page sets out the tiers.
Insurable means you put down 20% or more and the loan still meets insurance rules, such as a price under $1,500,000 and an amortization of 25 years or less. Uninsured is everything else, including an amortization past 25 years with 20% down. Lenders set their own rates and conditions for each bucket, so ask which one your quote falls into.
Here’s an insured example. On a $600,000 home with the minimum down payment of $35,000, the loan-to-value ratio is above 90%, so CMHC’s premium is 4% of the $565,000 loan, or $22,600. The premium is added to the mortgage, making it $587,600, and the payment is $3,285 a month at 4.6% over 25 years. The CMHC: purchase insurance page lists the full premium table, and the CMHC insurance calculator runs the numbers for any price.
Who can get a 30-year amortization on an insured mortgage?
Since 15 December 2024, Finance Canada has allowed 30-year amortizations on insured mortgages for all first-time buyers and all buyers of new builds. The announcement is on the Department of Finance Canada: mortgage reform details. The insurer adds a 0.2% surcharge to the premium for the longer schedule. On the $600,000 example, the premium becomes 4.2%, or $23,730, the loan $588,730, and the payment drops from $3,285 to $3,003.
An insurer’s own product page can read more narrowly than the federal announcement, so ask your lender in writing whether your purchase qualifies before you build a budget around the lower payment. Rules like these change. This section reflects what was in force as of October 2026.
What are prepayment privileges and portability?
Prepayment privileges are the extra amounts you can pay each year without a penalty, such as a lump sum or a higher regular payment. Portability lets you carry your rate and terms to a new home. Both depend on your lender’s contract. Per the Financial Consumer Agency of Canada: prepayment penalties, porting can save you from breaking the contract.
Extra payments do real work early. On the $520,000 loan, adding $200 a month cuts the 25-year schedule by 2.75 years and saves $42,532 in interest. Our mortgage prepayment calculator shows the effect of other amounts.
How is a mortgage penalty worked out, and what is blend and extend?
On a fixed-rate mortgage the penalty is usually the higher of three months of interest or the interest rate differential (IRD). The FCAC page above gives a $200,000 example at 6% where the IRD comes to about $12,000. Here’s one of ours: a $400,000 balance at 5.2% with 30 months left and a comparison rate of 4.1%. Three months of interest is $5,200, the IRD is $11,000, so the lender would ask for $11,000.
Lenders define the comparison rate differently, and some start from a posted rate that’s higher than anything they actually offer, so two lenders can quote different penalties on the same balance. Blend and extend is one way around the penalty. The lender blends your current rate with today’s rate and stretches the term, so you keep the mortgage without paying to break it. The blended rate is usually no bargain, so compare it with what another lender would give you. The mortgage penalty calculator estimates both methods.
Why do mortgage rates compound semi-annually?
Canadian fixed-rate mortgages are quoted with semi-annual compounding, so the effective monthly rate comes out a bit below the annual rate divided by 12. At 4.6% it’s 0.3797%, where dividing by 12 would give 0.3833%. The gap looks tiny, but across hundreds of payments it shows up, and every payment figure in this article uses the semi-annual method. It’s also why a payment from a US-style calculator can be off by a few dollars a month.
Where does this information come from?
Rules come from the Financial Consumer Agency of Canada, the Department of Finance Canada and CMHC; payments, interest totals and penalties are from the site’s mortgage engine, run in October 2026. Checked in October 2026. This is an independent information site: we provide no services, we do not represent the CRA or any organization, and we do not guarantee that anything here is accurate or current. We accept no liability for decisions based on it. Check the official source before you rely on it. See the full disclaimer.
Frequently asked questions
Can I switch lenders at renewal without a penalty?
Usually yes, because the term has ended and nothing is being broken. Your current lender sends a renewal offer before the term ends, and you can take it or move the balance elsewhere. A new lender may charge a small fee or cover it, so ask before you sign.
Does a longer amortization lower my rate?
No. The lender sets the rate based on the term you pick. A longer amortization only lowers the payment, such as $2,652 instead of $2,907 on a $520,000 loan at 4.6%, and it raises total interest by $82,701 over the life of the loan.
What is a trigger rate on a variable mortgage?
It's the point where your fixed payment no longer covers the interest, so the balance stops falling or starts to grow. Lenders usually call you or change the payment when it's hit. Your mortgage documents list it, or your lender can tell you.
Are accelerated bi-weekly payments better than monthly?
Accelerated bi-weekly means paying half the monthly amount every two weeks, which makes 26 half-payments, or 13 monthly payments a year. On the $520,000 loan at 4.6%, that clears the loan in about 21.7 years instead of 25.
Does insurance protect me if I miss payments?
No. Mortgage default insurance protects the lender. You pay the premium, usually 2.8% to 4% of the loan above 80% loan-to-value, and the lender collects from the insurer if you default. Life or disability insurance is a different product.