Your mortgage amortization period is the number of years it takes to pay off your mortgage. The amortization length affects how quickly you become mortgage-free and how much interest you pay. A longer period means more interest, while a shorter one means less interest but higher payments.

Typically lenders use a 25-year benchmark for mortgages. It is also the basis for standard mortgage calculators. However, you have other options. Amortization periods can be as short as 5 years or as long as 35 years.

If you go for a shorter amortization period, you’ll pay less interest over the mortgage’s life. You’ll also become mortgage-free faster and gain access to your home equity sooner. However, shorter periods mean higher monthly payments. If your income is irregular, you have a tight budget, or you’re a first-time homeowner, a shorter period may not be ideal as it ties up more cash flow in mortgage payments.

On the other hand, longer amortization periods have their advantages too. Smaller monthly mortgage payments make homeownership less overwhelming for first-time buyers and free up extra cash for other expenses. Additionally, opting for a longer period may help you buy your dream home sooner by utilizing standard mortgage payments. In some cases, you might even qualify for a slightly higher mortgage value compared to a shorter period, depending on your situation.

Your mortgage professional can assist you in selecting the best amortization period that suits your needs and ensures sufficient cash flow. It is worth noting that you’re not stuck with your chosen amortization schedule forever. You can adjust its length or make extra payments at a later date if you have pre-payment options.

It is recommended to re-evaluate your mortgage at renewal time, which occurs every 3, 5, or 10 years depending on your mortgage product. It is an excellent opportunity to review your amortization and payment schedules and make changes if needed.

If you have any questions or are ready to purchase a home, don’t hesitate to contact your mortgage professional for expert advice!