Mortgage Basics #Home Buying

How Long Will It Take to Pay off My Mortgage?


Getting approved for a mortgage that allows you to purchase your dream home can be pretty exciting. You probably put in a lot of effort to meet up with your lender’s requirements and it has finally paid off.

While this is great, you need to keep in mind that you would be parting with some income on a biweekly or monthly basis as mortgage payments over many years.

So, before you make any major financial plans or decisions, it is essential to consider how long to pay off mortgage.

Key Takeaways

  • You can determine your monthly payments and entire mortgage payment duration from your amortization schedule
  • Your amortization period directly impacts how much mortgage payments you make and how long it would take to pay off your mortgage
  • You can alter your amortization period by refinancing your loan

How Long Will It Take To Pay Off My Mortgage?

Mortgage repayment period isn’t identical for all lenders, neither is it set in stone. To figure out how many years to pay off mortgage (all things being equal), your mortgage amortization schedule holds the answers. The schedule outlines monthly payments, how the payment is split between interest and principal, as well as the number of payments remaining. 

The last payment date that your amortization schedule reads would be the final date that you would have to make a payment. After that date, provided you haven’t defaulted, then it would be safe to say that you have paid off your mortgage. 

You would likely find your amortization schedule listed in the same

place as your mortgage documents. If you are having difficulty accessing that, you can reach out to your lender to grab a copy. Some lenders also send it alongside your regular statement or allow you to access it online. 

What’s the Ideal Budget to Spend On Mortgage Payments?

The ideal budget to spend on mortgage payments is guided by the debt service ratios. Most financial institutions recommend that your Gross Debt Service (GDS) Ratio should not exceed 30% to 32% of gross annual income. Officially, this percentage may tend towards 35% to 39%.

This ratio is determined using the portion of your gross income that goes towards housing, including mortgage payments — interest and principal, property taxes, as well as heating costs and condominium maintenance fees (if this applies).

The Total Debt Service (TDS) Ratio is also essential to determine an ideal budget. It comprises all other debts such as credit card debt, car loans, student loans, personal loans, as well as housing costs (the factors used to calculate GDS). Most lenders typically accept TDS ratios that do not exceed between 37% to 40% of gross annual income. Officially, this percentage may tend towards 42% to 44%.

If you are purchasing as a couple, both your ratios would be considered. In addition, other factors that affects your budget are your amortization period and stress test.

Amortization Periods in Canada

While neither a foreclosure nor a power of sale seems like a palatable situation, one might still be

The amortization period deals directly with ‘how long does it take to pay off a mortgage’? In the wake of the 2008 financial crisis, amortization periods shrunk from 40 years to the present common options of 15, 20, or 25 years. Thanks to historically low interest rates which makes extended amortization periods desirable, most borrowers opt for a 25-year amortization. The high price tag on houses has encouraged this action as well. 

In essence, the most common amortization period in Canada is the 25-year amortization. The second most common is the 30-year amortization. However, the insurers do not support the 30-year amortization, and as such, you would have to be willing to pay at least 20% as a down payment. Homes purchased from 2012 with low ratio mortgages have a maximum amortization period of 30 years as a result of the mortgage rules that came into effect in 2011/2012. High ratio mortgages now see a maximum amortization period of 25 years.

The amortization period differs from the mortgage term which refers to the duration during which a particular mortgage provider would service your mortgage. The amortization period on the other hand refers to the entire life of your mortgage. Most people opt for a 30-year amortization to reduce monthly payments over the years, however, they would be paying back for longer (5 extra years) compared to a 25-year amortization. 

The baseline is that before opting for an amortization period (which is how long till mortgage paid off), it is essential to consider finances in the long term. 

Can I Change My Amortization Schedule?

Yes, you can. One way to go about this is to pay off your present mortgage earlier than the terms dictate. When you have done this, then you can go ahead to get a new amortization period. Paying off your mortgage earlier is important because you need it to break your present terms and get a new mortgage. In essence, you would be refinancing. 

Refinancing may typically involve paying a prepayment penalty for not seeing your mortgage through, however, this would depend on the terms in your mortgage contract. These penalties may run into thousands of dollars, and could even be steeper if your mortgage has a fixed rate, making refinancing quite expensive. The best way to minimize this penalty is to proceed with refinancing when your mortgage term draws to a close. 

Refinancing offers you the freedom to choose another amortization period. This way, you can opt to spread your payment over more years or get a shorter amortization period and make higher payments. Note that your ability to refinance is subject to regulatory requirements and approval. 

Final Thoughts

You can determine how much time left on my mortgage by simply reviewing your amortization schedule. Provided you don’t default on payments or run into any issues with your lender, you should be able to accurately predict your payment period using this schedule. If you opt to refinance, your new amortization schedule would provide the same information. 


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