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Is the 30-Year Mortgage in Canada a Wise Choice?

By Patrick Ross · Reviewed By Jacob Norris · Last Updated September 30, 2024
30-year mortgage in Canada. Here is what you need to know

Table of contents

  • Afford more home with the 30-year mortgage?????
  • How much will a 30-year mortgage cost?

How much will a 30-year mortgage cost?

While the 30-year amortization period for a mortgage allows homebuyers to be approved for increased mortgage through lower mortgage payments — this flexibility comes at a cost which is the additional 5-years you will be making mortgage payments over the 25-year mortgage.

Let's find out what the difference in cost between the 30-year and 25-year if you were to purchase the average priced home in Canada which is $649,096.

For this calculation we will use a 5-year fixed mortgage rate of 5.62% — the average 5-year fixed mortgage rate over the past twenty years.

We will also apply the minimum down payment in spirit with the increased CHHC insured limit.

The monthly payment for the 30-year mortgage would be $3,549 — which is $287 a month cheaper than the $3,835 monthly payment required with the 25-year mortgage.

30-Year Mortgage 25-Year Mortgage
Mortgage Payment $3,549 $3,835
Total Interest $656,321 $529,371
Total Mortgage Cost $1,277,514 $1,150,564

While the 30-year mortgage has cheaper payments by $287/month the total cost of the mortgage includes an additional $126,950 of interest when compared to the 25-year counterpart.