# How does amortization affect my mortgage?

> Amortization represents the total time it takes to fully repay your mortgage.

Category: Renewal
Last verified: 2026-04-14
Source: https://ratellow.com/faqs/renewal/how-does-amortization-affect-my-mortgage

## Answer
Here's a clear example of how it works:

| Loan Amount | Interest Rate | Amortization (Years) | Monthly Payment | Total Interest Paid |
|---|---|---|---|---|
| $500,000 | 5% | 25 | ~$2,923.00 | ~$377,000 |
| $500,000 | 5% | 30 | ~$2,684.11 | ~$466,279 |

As you can see, extending the amortization from 25 to 30 years saves about $239 each month, but adds about $89,279 to the total interest paid. For a $500k mortgage, this can drastically change the decision-making process.

## Institutional highlights
- Your lender sets the maximum time you have to pay off your mortgage.
- Lenders try to keep the average mortgage payoff time shorter than the maximum allowed.
- The time you take to pay off your mortgage affects your monthly payments and how quickly you build equity in your home.

## Related guide
- https://ratellow.com/guides/refinance-extend-amortization

## Sources
- Property appraisals — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.4.2
- I. Purpose and scope of the guideline — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#1.0
- Mortgage insurance — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.5.1