30-Year Amortization: A Breath of Fresh Air... That Can Cost You Dearly
Planiprêt
Jun 11, 2026
Since fall 2024, insured buyers can access a 30-year amortization. For many, it's a lifeline. For others, it's a well-packaged trap. Here's Sophie's story, and why she almost made the wrong call.
Sophie Just Wanted the Numbers to Work
Sophie is 31 years old. She's been saving for four years to buy her first condo. When her broker laid out the numbers, reality hit hard: with a 25-year amortization, the monthly payments were just slightly above what she wanted to spend.
"My broker mentioned there was a 30-year option. I heard $231 less per month and almost signed right away."
Fortunately, her broker took the time to show her the other side of the picture. The one you don't see at first glance.
The 2024 Changes: What They Allow
Since December 1, 2024, the federal government allows first-time buyers to amortize over 30 years, provided the loan is insured by CMHC or another mortgage insurer. In practical terms, this applies when the down payment is less than 20% of the property's value.
The measure also applies to buyers of new construction properties, whether it's a first purchase or not.
The stated goal is straightforward: improve housing affordability by reducing the required monthly payment. On paper, it's good news. In practice, the real impact depends entirely on each buyer's situation.
What the Numbers Actually Say
Here is the comparison Sophie's broker put in front of her:
Estimates based on a $450,000 mortgage at a 4.09% rate. For illustration purposes only.
| 25 years | 30 years | |
| Monthly payment | ~$2,326 | ~$2,095 |
| Monthly savings | ~$231 | |
| Total interest paid | ~$197,800 | ~$254,200 |
| Extra interest cost | ~$56,400 |
Sophie saved $231 per month. In exchange, she paid $56,400 more in interest over the full life of the loan. Not to mention her mortgage would be paid off five years later.
That's not a bad decision in itself. But it has to be a conscious one.
When 30 Years Is the Right Strategy
There are situations where choosing 30 years is entirely justified, and even advantageous. Your broker might recommend it if:
- Your income is stable, but your cash flow is tight at the time of purchase
- You expect significant income growth in the coming years
- You want to keep financial breathing room for an emergency fund or other projects
- The property you want is in an appreciating market and you want to enter now
In these cases, the flexibility of a lower payment can be worth the additional long-term cost, especially if you use prepayment privileges along the way to make up the difference.
When 30 Years Becomes a Trap
Conversely, some buyers choose 30 years for the wrong reasons:
- To qualify for a property whose price genuinely exceeds their financial capacity
- Without a concrete plan to accelerate repayments once their situation stabilizes
- Forgetting that the CMHC insurance premium applies to the full loan amount, and is also amortized over 30 years
That last point is often overlooked. With a 5% down payment, the CMHC insurance premium equals 4% of the loan amount. It gets added to the mortgage balance and generates interest throughout the full term as well.
The Real Question to Ask Yourself
30 years isn't inherently good or bad. It's a tool. And like any tool, its usefulness depends entirely on how you use it.
"What changed my perspective was when my broker asked: do you plan to make annual prepayments? If yes, the 30-year option could work for you. If not, you're starting with $56,000 in extra interest and no safety net."
Sophie ultimately chose 25 years, adjusting her monthly budget slightly. Her broker also showed her how accelerated weekly payments could save even more in interest, without much added effort.
But for other buyers in her situation, 30 years may be the right choice. That's exactly why this conversation needs to happen with a broker, before signing, not after.
Are you shopping for your first property and wondering which amortization to choose? Talk to us before deciding. We'll walk you through both scenarios completely, with no surprises.
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