Mortgage basics: rate, term and amortization, with today's numbers
A Canadian mortgage has three numbers that set its cost: the interest rate, the term (how long that rate lasts, usually one to ten years) and the amortization (how long until it is paid off, usually 25 or 30 years). On $500,000 at 4.59% over 25 years, the monthly payment is $2,792.44.
The rate
Fixed rates stay the same for the term; variable rates move with the lender's prime rate. Our rate board shows the lowest rate we collected from lenders' own pages for each term; the lowest uninsured 5-year fixed on Nov 2, 2026 was 4.59% at ATB Financial.
Term vs amortization
The term is your contract with the lender; at the end you renew, switch or pay off what's left. The amortization is the full repayment schedule. On $500,000 at 4.59% over 25 years you'd pay $107,180 of interest and $60,367 of principal in the first 5-year term, leaving $439,633 to renew.
| Amortization | Monthly payment | Interest in first 5 years |
|---|---|---|
| 20 years | $3,175.87 | $104,409 |
| 25 years | $2,792.44 | $107,180 |
| 30 years | $2,547.32 | $108,951 |
With under 20% down, the maximum amortization is 25 years, or 30 years for first-time buyers and buyers of new builds (since December 15, 2024).
Source: Department of Finance Canada, Mortgage reforms in force: $1.5M insured cap, 30-year amortizations, effective December 15, 2024. Checked .Semi-annual compounding
The Interest Act requires a blended-payment mortgage to state its rate yearly or half-yearly, and Canadian fixed-rate mortgages are quoted with semi-annual compounding. That makes the effective monthly rate slightly lower than the quoted rate divided by 12, so Canadian payments are a little lower than a US calculator would show. Variable mortgages commonly compound monthly.
Payment frequency
| Frequency | Payment | Balance after 5 years |
|---|---|---|
| Monthly | $2,792.44 | $439,633 |
| Bi-weekly | $1,287.50 | $439,633 |
| Accelerated bi-weekly | $1,396.22 | $423,783 |
Accelerated bi-weekly pays half the monthly payment every two weeks, which adds up to one extra monthly payment a year and pays the mortgage off sooner.
Open, closed and portable
A closed mortgage limits extra payments to your prepayment privileges and charges a penalty to break it; an open mortgage can be paid off any time but costs more. A portable mortgage can move with you to a new home. See how penalties are calculated.
| Mortgage | $500,000 |
|---|---|
| Rate | 4.59%lowest 20%+ down 5-yr fixed collected, ATB Financial |
| Amortization / term | 25 years / 5 years |
| Monthly payment | $2,792.44semi-annual compounding |
| Interest paid in the term | $107,180 |
| Principal repaid in the term | $60,367 |
| Balance left to renew | $439,633 |
Open this example in the calculator →Computed Nov 2, 2026.
What this means for you
- Comparing offers: compare like with like: the same term, insured status and amortization.
- Your renewal: the balance at renewal, not the original loan, is what you'll negotiate a new rate on.
- Paying it off faster: accelerated payments and annual lump sums cut interest without changing the rate.
Frequently asked questions
What is the difference between a mortgage term and amortization?
The term is how long your rate and contract last (often 5 years); the amortization is how long it takes to pay the whole mortgage off (often 25 years). You'll usually renew several times.
Why is my Canadian mortgage payment lower than a US calculator says?
Canadian fixed-rate mortgages compound semi-annually, not monthly, which lowers the effective monthly rate slightly.
Primary sources
- Justice Laws — Interest Act (R.S.C. 1985, c. I-15), ss. 6 and 10. Checked .
- Financial Consumer Agency of Canada — Mortgage terms and amortization. Checked .
- Department of Finance Canada — Mortgage reforms in force: $1.5M insured cap, 30-year amortizations (effective December 15, 2024). Checked .
- Financial Consumer Agency of Canada — Choosing a mortgage. Checked .