Amortization vs. Term: The Distinction Almost Everyone Mixes Up

Amortization is the total time it would take to pay off your mortgage completely at your current payment — commonly 25 years in Canada, sometimes longer. Term is much shorter: the length of your current agreement with your lender (commonly 1-5 years), covering the rate and conditions you've locked in.

You don't sign one mortgage for the full amortization. Instead, you renew your term repeatedly — at a rate that could be higher, lower, or the same — until the amortization is complete. A 25-year amortization on a 5-year term means you'll typically go through five separate renewals before the mortgage is paid off.

A longer amortization lowers your monthly payment by spreading it over more years, but increases total interest paid over the mortgage's life. A shorter amortization does the reverse. Most insured (high-ratio) mortgages are capped at 25 years, though some first-time buyers and new-construction purchases may qualify for extended amortizations — eligibility rules here have changed in recent years, so confirm current terms with your lender rather than assuming.