Apparently we learn about this in applied math. I don’t remember that, and in high school I was more concerned with how I was going to pay for poutine at lunch than how long I’m going to pay off the imaginary hundreds of thousands of dollars I didn’t have.
Amortization is the time it takes you to pay off your mortgage — the most common, and the maximum length (with CMHC), is 25 years.
If you pay over a 20% down payment then you don’t need to go through CMHC and different lenders may give you a longer amortization period.
The benefit of longer amortization period is that your monthly payments will be lower. However, you will be paying A LOT more interest.
Ratehub.com has a great graphic that shows how much more interest you pay from a 25-year amortization to a 30-year amortization.
Basically, try and go for the shortest amortization period that you can afford. Check in with your bank, credit union or lender to see if you can increase monthly payments down the road, or put lump sum payments to pay off your mortgage faster without penalties.
If you have any questions about mortgages, home buying and selling, or anything at all email me at firstname.lastname@example.org or call me at 204-941-1771.