What is the current maximum amortization period for a mortgage in Canada?

The current maximum amortization period for a mortgage in Canada is 25 years. This regulation is primarily applicable to high-ratio mortgages, which are loans where the borrower has a down payment of less than 20% of the property’s purchase price. The rationale behind limiting the amortization period is to reduce the overall risk in the housing market and ensure better financial health for borrowers by encouraging them to pay off their loans more quickly.

This regulation plays a critical role in maintaining a stable housing market by reducing the amount of interest paid over the life of the mortgage and helping borrowers build equity faster. In contrast, longer amortization periods, such as 30 or 35 years, can lead to borrowers becoming "underwater" or owing more than the property is worth, particularly in volatile markets. In summary, the 25-year maximum amortization is designed to promote responsible lending and borrowing practices in Canada’s mortgage system.