Understanding mortgage amortization

Amortisation refers to the number of years it will take to repay your mortgage in full. Based on your down payment and current legislation, amortisation periods can run up to 30 years.

Shorter amortisation periods allow you to accelerate paying off your mortgage. The other advantage is that you will pay less interest the more the timeline shortens. The tradeoff is that you will pay more for your monthly payment.

The mortgage payment and method need to unify with your overall financial plan. For example, a mortgage of $400,000 at an average fixed rate of 5% and a 30-year amortisation will have a $2,134 monthly payment, and you will pay $368,506 interest over the 30 years. Reducing the period to 25 years, you’ll pay more at $2,326, but your total interest expense will be reduced to $297,924, saving $70,882.

In our calculator section on this website, we have mortgage calculators, which may prove helpful for planning.