What is the maximum mortgage amortization?

Before answering the question what is the maximum mortgage amortization, we should first explain what an amortization is. Our clients will often get confused between the term of the mortgage and the amortization of the mortgage.

Mortgage term

Essentially the term of the mortgage is the length of the contract between the borrower and the lender. For example if a borrower enters into a two-year term with a fixed rate of 3% that means that that rate will be guaranteed and paid at that rate for the two years. Once the two years have elapsed, then three main things can happen:

Three main things can happen:

1. The mortgage might be renewed (that’s if the borrower and the lender both agree that they would like to renew the mortgage). Renewing the mortgage just means that the borrower will agree to the new terms of the mortgage and extend for another relatively short period of time. When the borrower renews a mortgage, the amount of the mortgage remains the same. Renewing the mortgage just means that the borrower will agree to the new terms of the mortgage and extend for another relatively short period of time. When the borrower renews a mortgage, the amount of the mortgage remains the same.
2. The borrower may decide to refinance, that could be with the existing mortgage lender or a different mortgage lender. Refinancing just means changing the amount of money that is being borrowed. For example, the borrower me decide to take the opportunity to increase the mortgage amount and take the extra funds to do some renovations on their home. Refinancing just means changing the amount of money that is being borrowed. For example, the borrower may decide to take the opportunity to increase the mortgage amount and take the extra funds to do some renovations on their home.
3. The borrower may decide to pay out the lender. There are many examples of this. The borrower may be selling their home and paying out the mortgage. The borrower may be have enough savings or an inheritance to pay out the mortgage. The borrower may decide to pay out this lender and move their business to a different lender and either just switch the same amount or refinance with the new lender.

All options are on the table when a mortgage matures meaning that the term of the mortgage is complete. When the term is complete it does not mean that the mortgage has been paid off it just means that the contract is complete.

What Is A Mortgage Amortization?

The amortization of the mortgage is the length of time that it is going to take to pay off the mortgage completely under the current terms. So if a borrower enters into a five year term with a 25 year amortization, then the payments will be set such that it would take 25 years to pay off the mortgage completely at that rate.

The longer the amortization, the longer it will take to pay off the mortgage, and the lower the payments. Thus, increasing the length of the amortization when the mortgage is set up, is a strategy that can be used to make the mortgage more affordable since the payments will be less. The downside is that you are dragging out the mortgage. The upside is that it may allow you to qualify which you would otherwise not be able to do, or it may not be important to the borrower to pay down the mortgage quickly but rather to have the extra cash flow. For example, many rental properties will have mortgages with a longer amortization because it is an investment and there is no hurry to pay down the debt.

Now back to the original question: what is the maximum mortgage amortization?

In short, the maximum is 40 years. this is a little unusual, and very few banks offer this nowadays but it is sometimes a very good option if it makes the difference between continuing to rent or purchasing a home that is yours. The most common amortization period is 25 years. This is mandated by the government when you are putting less than 20% down on a purchase. Once you exceed or meet the 20% down, then most banks will consider a 30 year amortization. In order to extend it past 30 years, you would need a more substantial down payment (we are talking about 30-35%) or an equivalent amount of equity in the home.