Amortization
Explore amortization in Canadian real estate, how it affects mortgage repayment, interest costs, and homeownership planning.
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
- Mortgage
- Mortgage Term
- Refinance
- Interest Rate
- Loan-to-Value Ratio (LTV)
6525 Mississauga Road and its surrounding context. (RBC Capital Markets & CBRE)
Property details for 6525 Mississauga Road. (RBC Capital Markets & CBRE)
National average resale-price growth and housing-starts growth, smoothed over three months. The comparison illustrates the cycle; it does not establish how much a price change causes construction to change.
Trailing 12-month starts in centres of 50,000 or more remove the usual monthly seasonality. Ownership combines the homeowner and condominium categories; rental is shown separately.
Six-month averages of provincial starts, expressed at annual rates. The smoothing reduces the influence of individual apartment projects.
The same August benchmark compared with two different starting points. Three-month changes are not annualized.
Average sale prices show the difference in purchase costs across markets. They do not measure affordability relative to local incomes or construction costs.
Newfoundland and Labrador remains above its pre-pandemic sales pattern, but August activity was below last year. Historical lines retain their original release vintages.
Average and median describe different aspects of the same month’s transactions. Both are affected by the mix of homes sold.
Category averages compare different homes and locations; the gaps are not estimates of the cost to upgrade an otherwise identical property.
The five categories shown account for 5,000 of the board’s 5,057 sales. The remaining 57 transactions were in other housing categories.
Monthly observations are not seasonally adjusted. Active listings count properties available at month-end; they are not construction inventory.
Average and median prices share one dollar axis. These unadjusted transaction measures do not control for changes in the homes sold.
TRREB’s 416/905 categories compare the apartments sold in each area. The difference does not isolate a location premium for equivalent units.
5680 Oak Street in Vancouver and its surrounding context. (MCMP Architects)
Ground-level renderings of the tower proposed for 5680 Oak Street in Vancouver. (MCMP Architects)