TRENDING: Surrey Unveils New Land Use Plan For City Centre

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

Construction Loan

A construction loan is a short-term, interim financing option used to fund the building or major renovation of a property, with funds disbursed in. more

Certificate of Occupancy

A certificate of occupancy is an official document issued by a municipal authority confirming that a building complies with applicable codes and is. more

Bylaw Variance

A bylaw variance is official permission granted by a municipal authority allowing a property owner to deviate from local zoning or building bylaw. more

Absorption Rate

Absorption rate is a metric that measures the rate at which available properties are sold or leased in a specific market over a given period.. more

Corporate Restructuring

Corporate restructuring refers to the reorganization of a company’s operations, assets, or liabilities, often under court supervision, to improve. more

Consumer Proposal

A consumer proposal is a formal, legally binding agreement in Canada between an individual and their creditors to repay a portion of their debt over. more

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