From what I understand, the term is the length of time the mortgage agreement and interest rate will be in effect and the amortization period is the length of time it’d take to fully pay off the loan. In the case of a fixed loan, lets say a 30 year, wouldn't the interest rate be in effect for the entirety of the 30 years (since its fixed/same) thus meaning that the term is also 30 years (same as the amortization period)?

1 Answer 1


It is unusual for Canadian mortgages to have the same term and amortization. It's typical to have a 5 year term and a 25 year amortization, for example.

But rather than guessing what the term is (such as thinking, "it's probably the same as the amortization"), the correct thing to do is ask (or look at the offer.) The interest rate will depend on the term, since in a time when rates are moving, holding yours still is either something you need to pay for or be compensated for. This graph is from ratehub, a private site that compares Canadian interest rates:

enter image description here

A government of Canada page that defines words related to mortgages says:

Most mortgage holders in Canada have a mortgage term of 5 years or less, also known as a shorter-term mortgage. The shorter the term, the sooner you renew your mortgage contract.

  • 2
    It's fixed for the term of the mortgage. So if you have a 5-year term, it's fixed for 5 years. Only a 1 year term? Only fixed for a year. Things like penalties for paying off early etc are also term by term: whenever the term ends you can pay it off if you like, that sort of thing. Jun 9, 2021 at 17:22
  • 1
    Ok, now I understand, thanks :)
    – piny
    Jun 9, 2021 at 17:23
  • 1
    @Grade'Eh'Bacon "at a capped penalty level" confuses me, because "risk to the banks for long-term interest rate volatility is heightened if borrowers can renegotiate when rates drop" looks just like the refinancing that Americans do all the time
    – RonJohn
    Jun 9, 2021 at 18:43
  • 1
    @Grade'Eh'Bacon ahh... early payment penalties. I thought those were a long-dead relic.
    – RonJohn
    Jun 9, 2021 at 18:49
  • 1
    That's why there are stress tests to qualify for mortgages here. You have to qualify for a higher rate than you actually pay. I understand that anything different feels weird and scary - that's how I feel about US mortgages. I got my first mortgage at a time of 20% rates, so the thought of being locked into that rate terrifies me more than your worry of not being locked in for 25 or 30 years. The truth is everyone is used to their own system and thinks it's normal. No please, no more comments that the Canadian system is awful. Jun 12, 2021 at 13:02

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .