Many brokers see extended loan periods as necessary in the current market, but are also warning clients about the potential pitfalls
For mortgage borrowers, it’s been billed as a means of boosting affordability and easing monthly payments in a national market where prices remain eye-wateringly high compared with a decade ago.
First-time buyers can use it to gain a foothold into an increasingly expensive market, while strained homeowners are increasingly turning to the option to navigate the challenge of higher interest rates at renewal time.
But while the 30-year amortization has generally been positively received by the mortgage industry, it can also have its pitfalls – and experienced mortgage brokers are at pains to make sure their clients fully understand those drawbacks as well as the likely advantages.
Among those is Rob Jennings (pictured top), a Newfoundland-based broker with East Coast Mortgage Brokers, who told Canadian Mortgage Professional he’s frank with clients about the fact that longer amortizations aren’t necessarily always a catchall solution.
Changes to insured mortgage regulations, coming into effect at the end of 2024, extended 30-year amortizations to all first-time buyers regardless of property type, as well as to any buyer purchasing a newly built home.
Jennings said the expanded loan has proven a popular one, and that it’s usually a topic of conversation with borrowers and hopeful buyers – especially when their budgets are already squeezed.
“We’re going to offer the 30-year ams when we can as an option,” he told CMP. “We like to inform, advise, and provide options. We don’t like telling people what to do.”
Still, he’s candid about his reservations regarding the product, which its critics say saddles the borrower with higher debt over a longer period even if it makes current payments more manageable.
“I don’t love a 30-year am,” he said. “When you do the math on it, that extra five years is a majority – and a large majority – interest.”
The real potential cost of five extra years
The difference between paying off a mortgage over 25 years compared with 30 can climb into the tens of thousands of dollars, and analysts at Morningstar Canada have flagged a potentially even more significant gap for much larger mortgages.
For buyers or borrowers focused on the immediate relief of a lower monthly payment, those types of long-term considerations might not come into play – but they’re still significant, Jennings argued.
The reality of that trade-off, he said, is a conversation he regularly has with clients, including those who might not instinctively associate the longer amortization with their own situation.
No longer just a first-time buyer tool
When the Canadian government first announced the expanded 30-year amortization rules, the policy was positioned as a solution for younger Canadians and first-time buyers struggling with affordability, particularly in markets like Toronto and Vancouver where prices shot through the roof during the COVID-19 pandemic.
But brokers on the ground have reported that in practice, the policy has seen much wider uptake – and that can present its own challenges, particularly for older borrowers who need to stretch out the amortization.
“A lot of first-time buyers have to take it. A lot of second- and third-time homebuyers have to take it, too, because that’s just the way it is,” Jennings said.
While the flurry of mortgages renewing in 2025 and 2026 from pandemic-era lows hasn’t resulted in the crisis some feared, it’s still impacting a lot of borrowers’ finances negatively – and mortgage delinquencies are on the up in major markets, partly because of that continuing trend.
For Jennings, emphasizing the trade-off to clients is a necessary part of any conversation about using the 30-year amortization, particularly for older borrowers.
“I said to someone: I want you to take the money that you’re saving and apply it against the principal with your prepayment privileges,” he said of that discussion, “because you don’t want this mortgage for 30 years, especially when you see how much interest you pay in the first 10.”
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