Mortgage Blog

Can You Extend Your Mortgage Amortization in Canada?

February 19, 2025 | Posted by: Yelena Markus

With rising interest rates over the past few years, many Canadian homeowners are exploring ways to manage their mortgage payments. One of the most common questions mortgage holders ask is whether they can extend their amortization period to ease financial strain.

If you’re wondering whether you can increase the amortization on your mortgage, the answer is yes—but it’s a decision that requires careful consideration. Adjusting your amortization period impacts both your monthly payments and the overall cost of your mortgage.

Key Takeaways

• In Canada, high-ratio insured mortgages generally have a maximum amortization of 25 years. However, first-time home buyers may qualify for a 30-year amortization. Uninsured mortgages can extend up to 30 years.

• Some lenders may offer extended amortization up to 35 years with a 20% down payment or equivalent home equity.

• While extending amortization lowers monthly payments, it increases the total interest paid over time.

What Is an Amortization Period?

Your mortgage amortization period is the length of time required to fully repay your mortgage through regular payments. If you put down less than 20% on a home, the maximum amortization period allowed is 25 years (or 30 years for eligible first-time buyers and new builds). However, with a down payment of at least 20%, you can extend your amortization up to 30 years with prime lenders.

What Does an Amortization Extension Mean?

An amortization extension means increasing the original repayment period of your mortgage. While prime lenders limit amortizations to 30 years, alternative lenders may offer longer terms, sometimes up to 35 years. These extended options are typically available only to borrowers with at least 20% down or significant home equity.

Previously, insured mortgages in Canada allowed amortization periods of up to 35 years, but regulatory changes have since capped it at 25 years (or 30 for select cases). If you’re looking for an amortization beyond 30 years, you’ll need to work with an alternative lender.

Which Lenders Offer Extended Amortization?

Federally regulated prime lenders, such as major banks, do not provide amortization beyond 30 years. However, borrowers looking for extended repayment options may explore alternative mortgage lenders, who have more flexible lending criteria. Some non-bank lenders can extend amortization up to 35 years, but only for those with a 20% down payment or higher home equity.

Why Are More Canadians Facing Extended Amortization?

As interest rates increase, some homeowners with variable-rate mortgages are experiencing 'negative amortization,' where their monthly payments only cover interest and do not reduce the principal. This results in an effective extension of their mortgage term.

Several Canadian banks have reported an increase in mortgages exceeding 30 years. However, at renewal, these mortgages must revert to their original amortization period, leading to significantly higher payments.

Who Can Extend Their Mortgage Amortization?

• Homeowners with uninsured mortgages: If you originally secured a 30-year mortgage and need to reduce payments, you may be able to extend back to 30 years at renewal.

• Homeowners refinancing their mortgage: Extending amortization through refinancing requires requalification at current interest rates and may come with penalties for breaking your existing mortgage.

• Borrowers seeking alternative lending options: If you have at least 20% equity and struggle to qualify with a prime lender, a non-bank lender may offer amortization up to 35 years.

Risks of Extending Your Mortgage Amortization

While longer amortization can lower your monthly payments, it comes with trade-offs:

• Higher total interest costs: The longer you take to pay off your mortgage, the more interest you’ll pay.

• Slower equity growth: A longer amortization means a smaller portion of your payments go toward building home equity.

• Potential refinancing costs: If you extend amortization through refinancing, you may face penalties and fees.

• Higher interest rates: Extended amortization options typically come with higher rates due to lender risk.

To illustrate the financial impact, the table below compares interest costs for different amortization periods on a $600,000 mortgage at 5.39% interest:

(Disclaimer: Interest rates and calculations are for illustrative purposes only and may vary based on lender terms.)

Benefits of Extending Your Mortgage Amortization

Despite the risks, there are benefits to consider:

• Lower monthly payments: Helps improve cash flow, making it easier to manage other expenses.

• Increased borrowing power: A longer amortization can allow you to qualify for a higher mortgage amount.

• More financial flexibility: Some lenders offer prepayment options, allowing extra payments when possible without penalties.

Should You Extend Your Mortgage Amortization?

Deciding whether to extend your amortization depends on your financial situation and long-term goals. If your primary concern is lowering your monthly payments, it may be a viable option. However, if you aim to minimize interest costs and build equity faster, keeping a shorter amortization is often the better choice.

If you're unsure which option suits your needs best, consulting a professional mortgage broker can help you explore the best mortgage solutions tailored to your financial goals.

Work with the Best Mortgage Broker in Montreal

If you’re looking for expert guidance on mortgage solutions, refinancing, or extending your amortization, I’m here to help. As a leading Montreal mortgage broker, I specialize in securing the best mortgage options for homeowners and buyers. Whether you need lower monthly payments, better mortgage rates, or expert refinancing advice, I can provide tailored solutions to fit your needs.

Contact me today to discuss your mortgage options and ensure you make the right move for your financial well-being!

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