Mortgage Amortization Canada

Direct answer: Mortgage amortization is the time it takes to repay the full mortgage balance through scheduled payments. In Canada, fixed mortgage rates are commonly converted from a semi-annual quoted rate to an effective payment-period rate, then standard amortization math splits each payment between interest and principal.

Primary sources: FCAC: Mortgage terms and amortization; Interest Act, section 6.

Use the Mortgage Calculator to see the full schedule, compare payment frequencies and test extra payments.

Canadian semi-annual compounding formula

Primary sources: Interest Act, section 6; FCAC: Mortgage interest.

The usecos mortgage engine converts the quoted annual rate to an effective monthly rate with:

monthly rate = (1 + annual rate / 200) ^ (2 / 12) - 1

Then it calculates payment with:

payment = loan x monthly rate / (1 - (1 + monthly rate) ^ -months)

Example: a 5.00% quoted rate becomes about 0.412% per month for payment math.

20-year vs 25-year vs 30-year amortization

These examples use a $500,000 mortgage at 5.00%, monthly payments and Canadian semi-annual compounding.

Amortization	Monthly payment	Total interest	Tradeoff
20 years	About $3,286	About $288,550	Higher payment, lower interest.
25 years	About $2,908	About $372,407	Baseline comparison.
30 years	About $2,668	About $460,643	Lower payment, much higher total interest.

In this example, moving from 25 years to 30 years lowers the payment by about $240 per month but adds about $88,236 of interest over the full amortization.

Rate sensitivity

Rate	Payment on $500,000 over 25 years	Total interest
4.00%	About $2,630/mo	About $289,030
5.00%	About $2,908/mo	About $372,407
6.00%	About $3,199/mo	About $459,710
7.00%	About $3,502/mo	About $550,624

How to read an amortization schedule

An amortization schedule shows every payment over the life of your loan. Key columns:

• Payment: Your fixed periodic amount
• Principal: How much of that payment reduces your loan
• Interest: How much goes to the lender
• Balance: Remaining loan after each payment

Accelerated payments and lump sums

Primary sources: FCAC: Mortgage terms and amortization.

An accelerated biweekly payment is usually half of the monthly payment paid every two weeks. Because there are 26 biweekly periods, the borrower effectively makes one extra monthly payment per year. Lump-sum and extra-payment privileges depend on the mortgage contract, so check the lender terms before assuming a prepayment is allowed without penalty.

Common mistakes

• Comparing only the payment: longer amortization can look cheaper monthly while costing far more in interest.
• Forgetting renewal risk: a 25-year amortization may include several mortgage terms at different rates.
• Assuming every mortgage allows the same prepayment: privileges vary by lender and product.

Methodology and assumptions

Examples use the usecos mortgage engine, monthly payments, no CMHC premium, no extra payments and no lump-sum prepayment unless stated. They exclude renewal-rate changes, penalties, lender fees, property tax, insurance and closing costs. Verified July 29, 2026 against the Interest Act and the shipped usecos mortgage formula.

Sources: Interest Act, section 6; FCAC mortgages; usecos methodology.