How long will it take to pay off your mortgage?

Tim Bennett
by Tim Bennett October 26, 2020 / No Comments

“How long until my mortgage is paid off” is a question many homeowners ask themselves for decades. Mortgages are large financial commitments, so take many years to fully pay off.

While it might be hard to pay off your mortgage, it’s easy to calculate how long will it take to pay off your mortgage. Here’s what you need to know.

How to know how long it will take to pay off your mortgage

The easiest way to learn how long your mortgage will take to pay off is to check your mortgage amortization schedule. Your amortization schedule details how much you will pay off your mortgage each month, how much of each payment goes towards interest vs principal, and how many payments you have left. The final payment on your amortization schedule is the date your mortgage will be fully paid off.

Your amortization schedule should be listed in your original mortgage documents, but will also be available from your mortgage provider. Some lenders may provide it online or with your regular statement. If you can’t track it down, get in touch with your lender to ask for a copy.

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Amortization periods

More generally, your mortgage will be fully paid off when your amortization period ends. Your amortization period is the total life of your mortgage. This is different from your mortgage term, which is the amount of time your mortgage will be served by a particular mortgage provider. A longer amortization period results in lower monthly payments but will see you paying more interest over the life of the mortgage, as there’s more time for interest to accumulate.

In Canada, most mortgage amortization periods are around 20 to 25 years. Mortgages with down payments of less than 20% (also called high ratio mortgages) have a maximum amortization period of 25 years. Other mortgages can be as long as 30 years long.

If you don’t have an amortization schedule

If you don’t have an amortization schedule on hand, you can still estimate how much time is left on your mortgage. Using the “renewal or refinance” tab of the Ratehub.ca mortgage payment calculator, we can figure out how long is left on your mortgage. To use this method, you’ll need two figures:

  • The amount left to pay on your mortgage (the “mortgage amount”)
  • The interest rate you’re likely to be approved for (the “mortgage rate”)

If you’re not sure what rate you’re likely to be approved for, the calculator will suggest some rates currently available on the market. Keep in mind that you might not be approved for rates that low.

Once you’ve entered the amount and rate, pick an amortization period of up to 30 years. The “other” option lets you type a specific value. The calculator will then give you the monthly payment required to pay off your mortgage within that time. Next, change the amortization period until the monthly payment is close to the amount that you currently pay.

The amortization period you settle on is a good estimation of the number of years it will take to pay off your mortgage.

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Changing your amortization period

If you’re able and willing to pay off your mortgage sooner than your current mortgage allows, there is a way to change your amortization period. Changing your amortization period will require refinancing your mortgage, which involves breaking your current mortgage and starting a new one. The trouble is, refinancing can be expensive if you don’t do it correctly.

Depending on the conditions of your mortgage, refinancing will see you pay a pre-payment penalty for breaking your contract. These penalties are typically in the thousands of dollars. If your mortgage has a fixed rate, your prepayment penalty could be much higher. The way around this is to refinance at the end of your mortgage term. Doing this will minimize the cost of the pre-payment penalty.

When you refinance, you’ll have the option to select a new amortization period (subject to approval and regulatory requirements). You can decrease it to pay your mortgage off sooner or increase it to reduce your monthly payments.

The bottom line

How long it takes to pay off your mortgage is largely pre-determined by the conditions of your current mortgage. The easiest way to find this out is by speaking to your mortgage provider or looking at your amortization schedule. Refinancing is the primary way that you can change your amortization period, letting you pay off your mortgage either sooner or later, but you’ll need to time it right to reduce penalties. Speaking to a mortgage broker might be a good idea if you’re not sure what’s best for you.

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