Posted on: 01st Nov, 2011 10:39 pm
Hello members,
Can anyone explain to me the difference between amortization period and the mortgage term?
Can anyone explain to me the difference between amortization period and the mortgage term?
Hi Galina,
The amortization period actually refers to the number of years that will be taken to pay off your entire mortgage. This period will vary in length up to 30 years. The mortgage term is the length of time within which you have agreed to pay off the mortgage at a certain interest rate type and at a specified payment schedule. With the expiry in the loan term, the balance of the principal is repaid in full or the mortgage is renegotiated as per the current market rates and conditions.
Thanks,
Jerry
The amortization period actually refers to the number of years that will be taken to pay off your entire mortgage. This period will vary in length up to 30 years. The mortgage term is the length of time within which you have agreed to pay off the mortgage at a certain interest rate type and at a specified payment schedule. With the expiry in the loan term, the balance of the principal is repaid in full or the mortgage is renegotiated as per the current market rates and conditions.
Thanks,
Jerry
Hey Galina,
The amortization of the mortgage is different than the term of the mortgage. The amortization of the mortgage refers to the entire time that it will take for the loan to be paid and the house to be completely bought. The term is the period in which your current payment expectations are met. In other words, you may choose a 3 year term and a 20 year amortization. This would mean that your interest rate, your payments, and your pre-payment options would be the same for the next 3 years. At the end of these 3 years you would re-negotiate the term, and the amortization would now be 15 years.
Hope i could help!
The amortization of the mortgage is different than the term of the mortgage. The amortization of the mortgage refers to the entire time that it will take for the loan to be paid and the house to be completely bought. The term is the period in which your current payment expectations are met. In other words, you may choose a 3 year term and a 20 year amortization. This would mean that your interest rate, your payments, and your pre-payment options would be the same for the next 3 years. At the end of these 3 years you would re-negotiate the term, and the amortization would now be 15 years.
Hope i could help!