Understanding the difference between a 25-year and 30-year amortization is crucial for both investors and homeowners. Which amortization schedule you should use really depends on your individual goals. Let’s explore which one is best for your situation.
30-Year Amortization: Maximize cash flow
If you’re an investor focused on building your cash flow, you’ll be better off with a 30-year amortization. The key benefit is a lower monthly payment, which translates directly into better cash flow for your investment properties. This strategy allows you to keep more money in your pocket each month, providing flexibility for additional investments or covering unexpected expenses.
25-Year Amortization: Build Equity Faster
However, if you’re concerned with getting the best interest rate and building equity more quickly, the 25-year amortization is typically your best option. Lenders often offer better interest rates for shorter amortization periods, and you’ll pay significantly less interest over the life of the mortgage.
25-year amortizations are common amongst homeowners who plan to stay in their homes for an extended period and want to build equity faster. This approach means higher monthly payments, but you’ll own your property outright sooner.
Since lenders often offer better interest rates on 25-year terms, choosing between lower payments and less total interest can be tricky — book a free strategy call with LendCity and we will run the numbers for both options on your specific property.
Which Amortization Schedule Is Right for You?
The right choice really depends on your personal goals:
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Choose 30-year amortization if you prioritize cash flow and want to learn about fixing negative cash flow on rentals with lower payments
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Choose 25-year amortization if you want to build equity faster and secure a shorter mortgage term
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Consider your long-term strategy – are you focused on portfolio growth or paying down debt?
Talk to a Mortgage Professional
If you’re not entirely sure which amortization schedule you should choose and what your amortization means for your mortgage, we suggest reaching out to a mortgage professional who understands all available Residential Mortgage Financing.
We want to help you by offering a free strategy call to discuss your investment strategy using our free resources and personal mortgages. Whether you’re looking to get a mortgage for a new property or change the amortization schedule on an existing mortgage, we can help you make the most informed decision for your financial goals.
Whether you are focused on portfolio growth or paying down debt faster, matching the right amortization to your goals makes a real difference — book a free strategy call with us to talk through your situation.
Frequently Asked Questions
What is mortgage amortization?
How much more interest will I pay with a 30-year amortization?
Can I switch from a 30-year to a 25-year amortization later?
Do all lenders offer 30-year amortization options?
How does amortization affect my mortgage approval?
What's the difference between amortization and mortgage term?
Should I choose longer amortization and make extra payments instead?
Does amortization length affect interest rates?
Which amortization is better for rental property investors?
Can I get a 30-year amortization on my primary residence?
Disclaimer: LendCity Mortgages is a licensed mortgage brokerage, and our team includes experienced real estate investors. While we are qualified to provide mortgage-related guidance, the broader financial, tax, and legal information in this article is provided for educational purposes only and does not constitute financial planning, tax, or legal advice. For matters outside mortgage financing, we recommend consulting a Chartered Professional Accountant (CPA), licensed financial planner, or qualified legal advisor.
Written by
LendCity
Published
January 8, 2026
Reading Time
5 min read
Amortization
The period over which a mortgage is scheduled to be fully paid off through regular payments of principal and interest. In Canada, common amortization periods are 25 or 30 years, though the mortgage term (when you renegotiate) is typically 1-5 years.
Equity
The difference between a property's current market value and the remaining mortgage balance. If your home is worth $500,000 and you owe $300,000, you have $200,000 in equity. Equity builds through mortgage payments, appreciation, and property improvements.
Principal
The original amount of money borrowed on a mortgage, not including interest. Each mortgage payment includes both principal (paying down what you owe) and interest (the cost of borrowing). Over time, more of each payment goes toward principal as the loan balance decreases.
Refinance
Replacing an existing mortgage with a new one, typically to access equity, get a better rate, or change terms. Investors commonly refinance to pull out capital for purchasing additional properties (cash-out refinance) while retaining ownership of the original property.
Mortgage Broker
A licensed professional who shops multiple lenders to find the best mortgage rates and terms for borrowers. Unlike banks, brokers have access to dozens of lending options.
Prepayment Privileges
Terms in your mortgage that allow extra payments without penalty, typically 10-20% of the original balance annually. Helps pay off your mortgage faster.
Interest Rate
The cost of borrowing money, expressed as a percentage. It determines how much you pay on top of the principal borrowed.
Cash Flow
The money left over after collecting rent and paying all expenses including mortgage, taxes, insurance, maintenance, and property management.
Mortgage Term
The length of time your mortgage contract and interest rate are in effect. Typically ranges from 1 to 5 years in Canada, after which you renew or refinance.
Down Payment
The upfront cash payment when purchasing a property. For 1-4 unit investment properties, minimum 20% down is required. 5+ unit multifamily can use CMHC MLI Select with lower down payments, and house hackers can put as little as 5% down on owner-occupied 2-4 plexes.
CMHC Insurance
Mortgage default insurance from Canada Mortgage and Housing Corporation. For 1-4 unit investment properties, investors must put 20%+ down (no insurance available). However, CMHC offers MLI Select for 5+ unit multifamily properties, and house hackers can access insured mortgages with 5-10% down.
Appreciation
The increase in a property's value over time, which builds equity and wealth for the owner through market growth or forced improvements.
Rental Income
Revenue generated from tenants paying rent on an investment property. Gross rental income is the total collected before expenses, while net rental income subtracts operating costs to show actual profitability.
Insured Mortgage
A mortgage backed by mortgage default insurance from CMHC, Sagen, or Canada Guaranty, required when the down payment is less than 20% on owner-occupied properties. The insurance premium (ranging from 2.8% to 4% of the mortgage) is added to the loan. Insured mortgages qualify for lower interest rates because the lender's risk is covered by the insurer.
Hover over terms to see definitions, or visit our glossary for the full list.