Borrow $500,000 at 4.85% over 25 years and the payment is $2,865.48 a month. Across the full amortization you pay $359,643 in interest, so the total repaid is $859,643. The table under the result shows how each year splits between principal and interest.
What amortization means
Amortization is the number of years it takes to pay a mortgage down to zero. Your term is something else: the length of a single contract, usually five years. Expect to renew several times before the amortization ends, each time at whatever rate the market offers on the day.
How the schedule works
Each payment first covers the interest that built up since the last one. What is left reduces the loan. Early payments are mostly interest, because the balance starts high and the interest is charged on all of it. In year one of the example, $23,777 goes to interest and $10,609 to principal. By year ten the split is nearly even, at $18,056 of interest and $16,329 of principal. Year 25? Only $878 of interest.
Shorter or longer
Spread the same loan over 20 years and it costs $3,245.26 a month and $278,860 in interest. Stretch it to 30 years and the payment falls to $2,623.84 while the interest rises to $444,585. That is $621 less each month, but $165,725 more in interest overall. Insured mortgages can also carry a higher premium on 30-year schedules.
Monthly or bi-weekly
A bi-weekly payment is your monthly amount times twelve, divided into 26 payments. On the default numbers it is $1,321.11 every two weeks, and the interest is $358,717, a small saving. Accelerated payments save far more. Those are half the monthly amount every two weeks, which adds up to one extra monthly payment each year. The mortgage payment calculator has that option.
How Canadian mortgages compound
Fixed-rate mortgages in Canada compound twice a year, not monthly, and the schedule follows that method. Lenders may round the payment. That is why the last payment differs slightly from the rest, and why a small odd amount at the end is normal.
Extra payments
An extra payment goes straight to principal, so it lowers the interest charged for the rest of the loan. Many lenders let you pay a set share of the original mortgage each year, often as a lump sum or a higher regular payment. Ask yours where the limit sits. Also ask whether a penalty applies above it.
Choosing your amortization
A longer schedule means a lower payment and more room in the budget. A shorter one builds equity faster. It costs far less in interest. Plenty of buyers take a middle path. Longer amortization now, extra payments whenever money allows.
Comparing two loans
Run it twice with different rates. Half a point moves the total interest by thousands of dollars over 25 years. Check the balance after five years in each table to see what you would owe at your first renewal.
Where to go next
The balance column shows what you would owe at each renewal. That figure matters most if you plan to sell or refinance before the amortization ends, since the payout comes from it. Before you buy, check the loan itself with the CMHC insurance calculator if you put down less than 20%.
Frequently asked questions
What is an amortization schedule?
A table that shows every payment split into interest and principal, with the balance that remains.
What is the difference between amortization and term?
Amortization is the years needed to pay off the mortgage. The term is the length of one contract, often five years.
How much interest do I pay on a $500,000 mortgage?
At 4.85% over 25 years, about $359,643.
Why is most of my early payment interest?
Interest is charged on the balance, which is largest at the start.
Does a longer amortization cost more?
Yes. The payment is lower, but total interest is much higher.
Do Canadian mortgages compound monthly?
Fixed-rate mortgages compound twice a year. This calculator uses that method.
Sources and updates
Last reviewed: . Full disclaimer. How we build calculators. Editorial policy.
Estimate only. This calculator gives general information for planning. It is not tax, legal or financial advice, and it is not affiliated with the City of Toronto, MPAC or the Canada Revenue Agency. Results depend on the numbers you enter and may differ from official amounts. Check official sources or a qualified professional before you decide.