When you dispose a mortgage to help you with the purchase of a property, you will negotiate the details with your lending institution. Two of the items you will rule on will be term and amortization.
The term of your mortgage will be the length of time that you will be "locked in" to clear payments at a definite interest rate. For example, if you pick a "5 year ended mortgage term", this means that you will have mortgage payments of a clear whole for 5 years. At the end of 5 years, you will have to either pay the remaining whole owing to your mortgagee*, or renegotiate your mortgage. This length of time is ordinarily in the middle of 6 months and 5 years, although there are some lending institutions that will offer mortgage terms of 7 or 10 years.
Mortgages: What is the variation between Term and Amortization
If you pick to either renegotiate your mortgage or pay out your mortgage before the end of your term, you may have to pay a penalty, depending on the business agreement contained in your proper fee Terms*.
The amortization of your mortgage is the length of time that it would take you, at your current cost and interest rate, to pay your mortgage in full. This whole of time is ordinarily 20 or 25 years, when you first dispose your mortgage. As you expand through the years of payments on your mortgage, if you keep your payments similar, the amortization of your mortgage will decrease.
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