25 or 30-year amortization: is the lower payment worth it?

In Canada, a 30-year amortization lowers your monthly payment compared with 25 years, which can make a purchase fit your budget or help you qualify. The cost is more interest over the life of the loan, a slower build-up of equity and, on an insured mortgage, a higher insurance premium.

What amortization means

Your amortization is the total time it would take to pay off the mortgage if you kept making the scheduled payments. Amortization is different from your term, the length of your current contract, which is usually a few years. Stretching the amortization spreads the same loan over more payments, so each payment is smaller.

A worked example of the payment trade-off

These figures use an illustrative 4.5% rate, not a quote. The figures assume semi-annual compounding and a rate that stays the same for the whole amortization, which a real rate will not.

On a $450,000 mortgage, before any insurance premium is added:

	25 years	30 years
Monthly payment	about $2,491	about $2,269
Total interest	about $297,188	about $366,829
Balance after five years	about $395,084	about $409,951

The 30-year option frees up about $222 a month and costs about $69,641 more in interest. The longer amortization also slows your equity. At your first renewal, you would still owe roughly $14,867 more on the 30-year schedule than on the 25-year one.

Who can choose 30 years

On an insured mortgage, one with less than 20% down, a 30-year amortization has been available since December 15, 2024 to all first-time buyers and to all buyers of new builds (source: Department of Finance, checked October 2026). Other insured borrowers generally have a shorter maximum.

The insurance premium is higher for the longer amortization. CMHC announced a surcharge of 0.20% of the loan in August 2024. Check the current premium schedule with us or CMHC before you rely on the surcharge, because the rule was expanded later that year.

On a $450,000 loan with 10% down, the 3.10% premium is about $13,950. Adding 0.20% raises the premium to about $14,850, roughly $900 more. Ontario's 8% sales tax applies to the premium, and you pay that tax in cash at closing.

With 20% or more down, the mortgage is uninsured. Lenders may allow a 30-year amortization on an uninsured mortgage, depending on the lender and the property. The longer amortization can affect how the mortgage is priced.

When the longer amortization makes sense

A longer amortization can make sense when the lower payment gives you room to breathe in the early years, for example while you build an emergency fund. A longer amortization can also make sense when the lower payment is the difference between qualifying and not.

A longer amortization makes less sense if you can comfortably afford the 25-year payment, since you would pay interest for longer for no real benefit.

Many people take a middle path: the 30-year amortization for flexibility, then extra payments within the mortgage's prepayment privileges when cash allows. Those privileges are set out in your contract and vary by lender.

What to do next

Estimate the premium either way with the CMHC premium calculator; results are estimates only, not an offer or advice. Or use our call-me-back form and we will show you 25 and 30 years side by side.

Common follow-up questions

Can I shorten my amortization later?

Usually, yes: at renewal, or during the term by increasing payments within your prepayment privileges. Shortening the amortization raises your payment, so check that the new payment fits your budget.

Does a longer amortization help me qualify for more?

Yes, a longer amortization can help: it lowers the payment used in your debt-service ratios. You still have to pass the stress test, and the mortgage is subject to lender approval.

Is 30 years the same as a lower rate?

No. The rate is separate. A longer amortization lowers the payment by spreading the loan over more years, and you pay more interest overall.