Amortization is the engine that drives your property’s monthly debt service. For BC commercial borrowers, selecting the right amortization period—ranging from 20 to 40 years—is a strategic balance between immediate cash flow, total interest cost, and Debt Service Coverage (DSCR) qualification.
Amortization represents the full schedule over which your loan is structured to be fully repaid through regular payments. In the BC commercial landscape, it is one of the most impactful variables in a deal's financial outcome:
Standard institutional lenders typically cap amortization at 20–25 years. Some lenders offer up to 30 years for strong deals with Tier 1 assets.
The most powerful advantage for BC apartment building owners. CMHC MLI Select offers up to 40-year amortization.
Often structured as interest-only (zero amortization) for the loan term, minimizing monthly carry while building no equity.
Illustration for a $2M commercial mortgage at 6% interest:
| Period | Monthly Payment |
|---|---|
| 25-Year (Conventional) | ~$12,900 |
| 30-Year (Institutional) | ~$12,000 |
| 40-Year (CMHC MLI Select) | ~$10,700 |
The 40-year tier saves ~$2,200/month in debt service versus a standard 25-year schedule.
Debt Service Coverage Ratio (DSCR) is calculated on total debt service, which includes both principal and interest. By lengthening your amortization, you reduce the principal portion of each payment.
For BC apartment building deals that sit near the institutional DSCR threshold, accessing longer amortization through CMHC can move a deal from marginal to approvable without any change in the property's income. Learn about DSCR qualifying →
For standard conventional industrial or retail assets, expect 20–25 years. Purpose-built rental apartments using CMHC insurance frequently access 40-year schedules.
Yes. At renewal, you can negotiate a new amortization period with your existing lender or refinance to a new lender, subject to current credit policy and remaining loan balance.
Yes. For the same loan amount and rate, longer amortization Consistently produces lower debt service and therefore higher DSCR. The trade-off is higher total interest cost over the life of the loan.
Generally, no. A 40-year amortization is a specific benefit of CMHC's multifamily programs. Conventional BC commercial mortgages are capped at 25 or occasionally 30 years.
