Amortization

Explore amortization in Canadian real estate, how it affects mortgage repayment, interest costs, and homeownership planning.

Amortization
Escrow – Definition, Meaning, and Examples in Canadian Real Estate

May 22, 2025


What is Amortization?

Amortization refers to the process of gradually repaying a mortgage through regular payments over a fixed period of time.

Why Amortization Matters in Real Estate

In Canadian real estate, the amortization period determines the length of time it will take to fully pay off a mortgage. It impacts the size of monthly payments and total interest paid over the life of the loan.

Typical amortization periods:

  • 25 years for insured mortgages
  • Up to 30 years for uninsured mortgages

Amortization is distinct from the mortgage term, which defines the current contract period. The mortgage is typically renewed multiple times within the amortization schedule.

Understanding amortization helps buyers compare mortgage options and manage long-term affordability.

Example of Amortization

A homeowner selects a 25-year amortization and a 5-year term. They will renew the mortgage several times until the full loan is repaid.

Key Takeaways

  • Total time to repay a mortgage in full.
  • Affects monthly payment size and total interest.
  • Different from mortgage term.
  • Can be extended or shortened with refinancing.
  • Crucial for long-term budget planning.

Related Terms

Additional Terms

Public Realm Improvements

Public realm improvements are enhancements to public spaces such as sidewalks, parks, plazas, and streetscapes, often funded or contributed by. more

Mortgagee in Possession

A mortgagee in possession is a lender who takes control of a property after borrower default, but before foreclosure or power of sale. The lender. more

Lease Surrender Agreement

A lease surrender agreement is a negotiated contract between a landlord and tenant that ends a lease before its scheduled expiration. Terms may. more

Green Infrastructure

Green infrastructure refers to natural or engineered systems that manage stormwater, reduce heat, and improve sustainability in developments.. more

Escrow Holdback

An escrow holdback is a portion of funds withheld at closing and held in escrow until specific conditions are met, such as completion of repairs,. more

Underused Housing Tax

The Underused Housing Tax (UHT) is a federal annual 1% tax on the value of vacant or underused residential property owned by non-resident,. more

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