25 vs 30 Year Amortization: What the Extra 5 Years Really Costs Canadians
By Jordan Ellis · Published · Reviewed
Quick Answer
On a $450,000 Canadian mortgage at 5%, a 25-year amortization costs about $2,618/month and $335,000 in interest; stretching to 30 years drops the payment to about $2,402 but adds roughly $79,000 in interest. In Canada, 30-year amortizations are available with 20%+ down, and on insured mortgages for first-time buyers and buyers of new builds.
Amortization vs. term, first
A uniquely Canadian confusion: your amortization (25 or 30 years) is the payoff timeline that sets your payment. Your term (usually 5 years) is just how long your rate contract lasts. Choosing 25 vs 30 years is about the payment schedule — you’ll still renew the rate several times either way. This article is about amortization; for the rate choice itself, see our fixed vs variable guide.
The same mortgage, two timelines
A $450,000 mortgage at 5% (semi-annual compounding, as Canadian fixed rates work):
| 25-year | 30-year | |
|---|---|---|
| Monthly payment | $2,618 | $2,402 |
| Total interest | ~$335,000 | ~$415,000 |
| Balance after 5 years | ~$398,000 | ~$412,000 |
| Balance after 10 years | ~$326,000 | ~$360,000 |
The 30-year option saves $216/month and costs ~$79,000 in extra interest. Also note the equity gap: after 10 years, the 25-year borrower owes $34,000 less. In the early years of any amortization, payments are mostly interest — our amortization guide shows the mechanics.
Who actually gets to choose
- 20%+ down (uninsured): full choice, typically up to 30 years.
- Under 20% down (insured): capped at 25 years, except first-time buyers and buyers of new builds (30 allowed since December 15, 2024).
- Renewals: you can sometimes extend amortization at renewal or refinance, but that restarts the slow-interest phase — run the numbers in the mortgage calculator first.
The case for each side
25 years if: the payment fits comfortably and you’d otherwise just absorb the $216 into lifestyle spending. The forced discipline is worth $79,000.
30 years if: cash-flow flexibility has real value for you — variable income, young kids, or you’re directing the difference into a TFSA earning more than your mortgage rate, or against higher-interest debt. Just be honest that “flexibility” and “spending it” look identical in practice unless the difference is automated somewhere useful.
The hybrid: 30-year schedule, 25-year behaviour
Take the 30-year amortization, then set up an automatic prepayment equal to the 25-year payment ($216/month more, in our example). Canadian mortgages typically allow 10–20% annual prepayments plus payment increases of up to 100%. Result: you’re on the 25-year payoff track, but if income gets squeezed, you can drop to the lower required payment without missing anything. The flexibility costs you nothing while you don’t need it.
The bottom line
Amortization length is a trade between monthly breathing room and lifetime cost — about $79,000 for $216/month on a typical Canadian mortgage. Pick the schedule you can sustain in your worst month, then use prepayment privileges to attack it in your best ones. Run your own numbers with the mortgage calculator — switch between 25 and 30 years and watch the interest figure move.
Official sources
Rules and dollar limits change. Confirm current amounts with the official pages below before you act · Last reviewed .
- Mortgage loan insurance cost (CMHC)
- Mortgage prepayment penalties (Financial Consumer Agency of Canada)