Mortgage Term vs. Amortization

It can be really confusing and it is hard to tell the difference from the first glance between a mortgage term and amortization. But today we are here to tell you all the information we know. Firstly and shortly, amortization is bigger and more serious, it is the total length of your mortgage, while mortgage term is more like a contract that you must renew when it is over. But let us look at it in detail.


Before jumping into the rabbit hole let’s look at amortization popularity data. Amortization length starts at 24 years and ends at the point of more than 30 years (sometimes even 40 years, depending on the lender). Historically, the most preferable amortization was the one for 25 years (and its popularity growth). 

The less pickable amortization is one that is more than 30 years. Probably it is because we are now not sure about our tomorrow and it is really tough to take such responsibility for more than 30 years! Amortization from 26 to 30 years stays at 12% for over 10 years! What nice stability. 

  • The less pickable amortization is one that is more than 30 years
  • The most preferable amortization was the one for 25 years
  • Amortization from 26 to 30 years stays at 12% for over 10 years

Now let’s look at the mortgage term popularity data. Mortgage term length varies from 1 year to 10 years and more. What is interesting, among people from 18 to 34 years no one picks up more than a 10-year term, it is literally 0%! To be honest, no one likes terms that are more than 10 years. And the same goes with terms from 6 years to 10. 

At the same time, most preferable by all ages is a 5 years term. 66% of people choose it, and it is the most pickable option among people who are older than 55 years old. Other options go with mixed success. 

What Mortgage Term Is

Now we will move closer to the sense of this article. A mortgage term is the length of time you commit to the lender, mortgage rate, and associated mortgage terms and conditions. The conditions for it are set out by the lender. 

A mortgage term can be from half a year to 10 years and it directly affects your monthly mortgage payments (as well as your down payment). For almost all people the most preferable type of mortgage term is 5 years fixed, because the less time your contract goes, the less money as your interest you will pay to the bank.

What Amortisation Is

Amortisation, on the other hand, is the overall period of your mortgage. In other words — it is the length of time it will take you to pay off your entire mortgage. During amortization, you sign several mortgage contracts or mortgage terms. For now, the longest amortization period from the 2012 year is 25 years for all CMHC insured homes. 

As it was noticed before, the shorter your amortization is — the less money you lose. Because if it is long it reduces your monthly payments but increases overall interest payments and vice versa if it is short it reduces your interest payments (you can save thousands of dollars!) but increases monthly payments. So it is not affordable for anyone. 

Difference Between Amortization and Mortgage Term

We have already discussed that the main difference between the two is the time. And one of the definitions is more general than the other. Yes, there are some other differences, but they are very small. Here are some of them: 

  • You can use a mortgage term only for new mortgages, not for refinancing them. 
  • You can use an amortization for refinancing, but it is not recommended, because the longer your amortization is, the more difficult it is to get another mortgage.


This article was meant to help you to understand the difference between mortgage terms and amortization. We have shown you data about it, as well as its popularity. And we have tried to explain the difference in the simplest way possible. 

Moreover, this article can be useful to people who are just starting a Canadian real estate business or just want to be more informed about it.  We hope this article helped you out to find out what mortgage term and amortization really mean. And remember — stay calm and pay your payments on time!

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