You Can Get a 30-Year Mortgage in Canada. But Should You?
While 25-year mortgages are the most common among Canadian homeowners, 30-year mortgages have their appeal, too.
With a 30-year mortgage, you’ll get lower monthly payments and more financial flexibility than with a mortgage that amortizes over 25 years. But you’ll almost certainly pay more for your home overall.
The following primer on 30-year mortgages in Canada will help you decide if an extended mortgage amortization is right for you.
Who can get a 30-year mortgage in Canada?
You can currently only apply for a 30-year mortgage if you’re making a down payment of at least 20%, if you’re a first-time home buyer or if you’re purchasing new construction.
The 20% down payment threshold for non-first-timer/non-new-con buyers can make the upfront cost of 30-year mortgages prohibitively high.
Getting a 30-year mortgage for an $600,000 home, for example, would require a down payment of at least $120,000. With an insured 25-year mortgage, the minimum down payment would be $35,000.
Pros and cons of a 30-year mortgage
Pros
- By stretching your mortgage out an extra five years, your monthly payment will decrease.
- A 30-year mortgage may allow you more freedom to make prepayments that shorten the life of your loan.
Cons
- Higher interest rates and more time for you to be charged interest.
- Three decades is a long time to pay back a loan, and could interfere with retirement planning.
30-year mortgages vs 25-year mortgages: A cost comparison
The following example is based on Canada’s average sale price in December 2024, $676,640. To make for a simple, apples-to-apples comparison, we’ll use the same down payment amounts and interest rates.
30-year mortgage | 25-year mortgage | |
|---|---|---|
20% down payment | $135,328 | $135,328 |
Interest rate | 4% | 4% |
Monthly mortgage payment (5-year term) | $2,574 | $2,847 |
Total interest paid | $385,342 | $312,911 |
Total mortgage cost | $926,654 | $854,223 |
In this scenario, you’d pay $72,431 less in interest by getting a 25-year mortgage — but the lower mortgage payments associated with the 30-year mortgage might help you qualify for more financing and leave more breathing room in your budget.
Here’s an example for first-time home buyers. It uses the same home price as above but minimum down payment requirements. Because you’ll have to insure your mortgage when making a down payment of less than 20%, these figures include mortgage default insurance premiums.
In this example, you’d pay $88,223 more in interest costs if you opted for the 30-year mortgage, but your monthly payments would be $333 lower. Increasing your down payment would reduce your mortgage payment and limit the amount of interest you’d pay.
Deciding whether a 30-year mortgage is right for you means digging into these kinds of details with a trusted mortgage professional. Depending on your financial situation, a 30-year mortgage should be just one of the options at your disposal.
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Clay Jarvis