25 vs 30-Year Mortgage in Canada: What the Extra 5 Years Costs
A 30-year amortization lowers your mortgage payment, but you pay for those five extra years in interest and in a higher CMHC premium.
- Rules checked October 31, 2026
- By Krish Paul
- 6 min read
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This guide shows who qualifies, what the longer schedule costs on a typical insured mortgage, and the one way to keep the lower payment as a safety net without paying most of that interest.
The short answer
On a $450,000 insured mortgage at a hypothetical 4.5% rate, choosing 30 years instead of 25 lowers the payment by $223.99 a month but adds $72,532 in interest over the life of the loan. If you take the 30-year amortization and still pay the 25-year amount, the extra cost drops to about $2,748.
So a 30-year amortization is expensive as a plan and cheap as a backup. The difference is whether the lower payment is what you actually pay every month.
Who can choose 30 years in Canada
Your amortization is the total time it takes to pay off the mortgage. It is not the same as your term, which is usually 1 to 5 years before you renew. The Financial Consumer Agency of Canada (FCAC) sets out the limits:
- Down payment under 20% (an insured mortgage): up to 30 years if you are a first-time buyer, buying a new build, or both. Everyone else is capped at 25 years.
- Down payment over 20%: your lender sets the maximum amortization.
The 30-year option for insured mortgages was widened to all first-time buyers and all buyers of new builds effective December 15, 2024, according to the Department of Finance. The same change raised the price cap for insured mortgages from $1 million to $1.5 million. Neither the FCAC nor the Finance release defines a first-time buyer on those pages, so ask your lender how it applies the test.
The CMHC surcharge
Mortgage insurance costs more when you stretch the schedule. CMHC’s premium page says an amortization period beyond 25 years is subject to a 0.20% surcharge. With 10% down, the premium rate rises from 3.10% to 3.30% of the loan. On a $450,000 loan, that is $14,850 instead of $13,950, or $900 more. In the example below, the premium is added to the mortgage, so you also pay interest on it.
25 vs 30 years on a $500,000 home
Here is a hypothetical first-time buyer: a $500,000 home, 10% down, a $450,000 loan plus the CMHC premium, and a 4.5% fixed rate assumed to stay the same for the whole amortization. Payments are monthly, with interest compounded semi-annually, the usual setup for a Canadian fixed-rate mortgage.
| Option | Mortgage with premium | Monthly payment | Total interest | Owing after 5 years |
|---|---|---|---|---|
| 25 years | $463,950 | $2,567.84 | $306,401 | $407,331 |
| 30 years | $464,850 | $2,343.85 | $378,933 | $423,480 |
| 30 years, paying the 25-year amount | $464,850 | $2,567.84 | $308,249 | $408,455 |
Hypothetical example. CMHC premiums of 3.10% (25 years) and 3.30% (30 years) added to the loan. One rate for the full amortization; real rates change at each renewal.
Three things stand out. First, the payment saving is real but modest: $223.99 a month, or about 9%. Second, the interest cost is large. You make 60 more payments, and in the early years more of each payment goes to interest. Third, the gap shows up quickly. After one 5-year term, the 30-year borrower still owes $423,480, which is $16,149 more than the 25-year borrower.
That gap matters at renewal
Your rate resets when your term ends. A larger balance at renewal means any rate increase applies to more money. If you plan to switch lenders at renewal, the amount you need to move is also larger.
How the cost changes with the rate
The higher the rate, the more the extra five years cost. The monthly saving actually shrinks as rates rise, because a bigger share of each payment is interest no matter how long the schedule is.
| Rate (hypothetical) | 25-year payment | 30-year payment | Monthly saving | Extra interest |
|---|---|---|---|---|
| 3.5% | $2,316.36 | $2,080.84 | $235.52 | $53,291 |
| 4.5% | $2,567.84 | $2,343.85 | $223.99 | $72,532 |
| 5.5% | $2,831.91 | $2,621.32 | $210.59 | $93,200 |
Same $500,000 purchase with 10% down and CMHC premium added. Each rate held for the full amortization.
At 5.5%, every dollar of monthly breathing room costs about $443 in lifetime interest. At 3.5%, it costs about $226.
The backup plan: take 30, pay like 25
If your lender lets you raise your payment, you can take the 30-year amortization and voluntarily pay the 25-year amount. In our 4.5% example, that clears the mortgage in 25 years and 2 months. Total interest is $308,249, just $1,848 more than the true 25-year mortgage. Add the $900 surcharge and the full cost of the safety net is about $2,748.
In return, you can drop back to the lower required payment if your income falls, a baby arrives or a big repair hits. That is the main case for 30 years.
This only works if your mortgage allows it. The FCAC notes that prepayment privileges vary from lender to lender, and not all lenders allow them on closed mortgages. Read the payment increase and lump-sum limits in your commitment letter before you sign. Our guide to mortgage prepayment penalties covers what happens if you go over them.
When 30 years makes sense, and when it does not
- It can make senseif the lower payment is the difference between passing and failing your budget, and you will raise payments once your income grows.
- It can make senseas a cushion, if you have the discipline to pay the 25-year amount and your mortgage allows payment increases.
- It is a costly choiceif you will simply pay the minimum for 30 years. At 4.5% in our example, that is over $72,000 in extra interest.
- Think twiceif the only way the home works is with the longer schedule. Rates reset at renewal, and a larger balance leaves less room.
How to decide
- Confirm you qualify. With under 20% down, you need to be a first-time buyer or buying a new build. Ask your lender how it defines a first-time buyer.
- Get both quotes. Ask for the payment and the total interest at 25 and 30 years, at the same rate. Under the federal Interest Act, your mortgage must state the rate calculated yearly or half-yearly.
- Price the surcharge. Multiply your loan by 0.20% to see what the longer amortization adds to your CMHC premium. Our CMHC insurance cost guide shows the full premium table.
- Check prepayment privileges. Find out how much you can increase your regular payment and how often.
- Pick your real payment. If you choose 30 years, set up the higher payment from day one and treat the lower one as your emergency option.
Payment frequency matters too. Switching to accelerated biweekly payments shortens the payoff without changing your amortization on paper.
Frequently asked questions
Is a 30-year mortgage worth it in Canada?
It depends on what you do with the lower payment. In our example at 4.5%, a 30-year amortization cuts the monthly payment by $223.99 but adds $72,532 in interest. If you keep making the 25-year payment through prepayment privileges, the extra cost falls to about $2,748, mostly the CMHC surcharge.
Who can get a 30-year amortization in Canada?
With a down payment under 20%, the FCAC says the maximum amortization is 30 years if you are a first-time buyer or buying a new build, and 25 years in all other cases. With a larger down payment, your lender sets the maximum.
How much more does CMHC charge for a 30-year amortization?
CMHC adds a 0.20% surcharge to the premium rate for an amortization beyond 25 years. With 10% down, the premium rate goes from 3.10% to 3.30% of the loan, which is $900 more on a $450,000 loan.
How much lower is the payment on a 30-year mortgage?
In our hypothetical example of a $450,000 loan with 10% down, the 30-year payment is $210.59 to $235.52 a month lower than the 25-year payment, depending on whether the rate is 5.5% or 3.5%.
Can you pay off a 30-year mortgage in 25 years?
Usually, if your mortgage lets you increase your payments. In our example at 4.5%, paying the 25-year amount on the 30-year mortgage clears it in 25 years and 2 months. Prepayment privileges vary by lender, so check your contract before you count on this.
- Sources, checked October 31, 2026: FCAC: Choosing a mortgage (modified 2025-10-15), amortization limits and prepayment privileges; Department of Finance: Government announces boldest mortgage reforms in decades (September 16, 2024), 30-year eligibility and $1.5 million cap effective December 15, 2024; Department of Finance: Mortgage reform details (September 24, 2024); CMHC: Premium information for homeowner and small rental loans, premium rates and the 0.20% surcharge; CMHC: Revised homeowner mortgage loan insurance premiums (June 5, 2024); Interest Act, section 6, current to 2026-09-21.
- Method: Payments use the standard Canadian formula: semi-annual compounding converted to a monthly rate, with the payment rounded to the cent. Total interest comes from a month-by-month schedule (the last payment is smaller) minus the mortgage with premium. Results were checked against the closed-form total (payment times number of payments, within $3) and a second payment formula using the effective annual rate, and the formula was confirmed against the textbook case of $100,000 at 5% over 25 years ($581.60 a month). Rates are hypothetical and held constant.
Important: This guide is general information, not financial or legal advice. Your lender, insurer and contract terms decide what you can get. Examples are hypothetical and use CMHC’s published premiums. Gizly is not paid by any lender mentioned here. See our affiliate disclosure.
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How this page was made: Gizly uses AI tools to help research and draft its guides. Krish Paul, the editor, is responsible for what Gizly publishes. Spot an error? Tell us and we will fix it.
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