There are typically a lot of physical and mental stresses associated with home buying. It also doesn't help that the process comes with its very own complicated terms and policies. While your mortgage broker can help breaking down these terms, it does help to have a bit of a dictionary on what some of these terms mean.
Let's start with the words "Amortization" and "Term". of which refer to periods of time in the life of your mortgage, however note that there is a difference. The "amortization" of your mortgage loan is the duration of time that would be required to reduce your mortgage loan to zero, based on calculated payments at a determined interest rate. The amortization period is normally 15, 20 or even 25 years, although it can be any number of years or part-years. For example, you can make monthly payments of $950 for your $130,000 mortgage at 5.5%. In this case, your amortization duration will be just under 18 years.
Or you want to tell your broker that you'd like to be mortgage-free in just 10 years then that would be an amortization length of 10 years. At the same interest rate, your $130,000 mortgage will come out to be about $1,407 per month. That's a tougher ordeal, but the benefit is that you would save thousands of dollars in . Keep in mind about your amortization period as you arrange your mortgage. You can stretch it long if you want to be comfortable with the monthly payments, although the shorter you can make it, the more you'll save in paying for your home by deducting from the interest..
The "term" is the length of your mortgage agreement and it will typically be shorter. You will have several choices but this will be a very specific period of time. For example, a 6-month mortgage is a very short-term mortgage while a 10-year mortgage will be one of the longest terms. Generally the longer the term, the higher the rate of interest will be. This is due to the higher level of risk in the economic outlook.
Later on when your mortgage term expires, you will need to either pay off the remaining balance of the mortgage principal, or negotiate for a new Ontario mortgage at whatever rates that are available at that present time. - 30462
Let's start with the words "Amortization" and "Term". of which refer to periods of time in the life of your mortgage, however note that there is a difference. The "amortization" of your mortgage loan is the duration of time that would be required to reduce your mortgage loan to zero, based on calculated payments at a determined interest rate. The amortization period is normally 15, 20 or even 25 years, although it can be any number of years or part-years. For example, you can make monthly payments of $950 for your $130,000 mortgage at 5.5%. In this case, your amortization duration will be just under 18 years.
Or you want to tell your broker that you'd like to be mortgage-free in just 10 years then that would be an amortization length of 10 years. At the same interest rate, your $130,000 mortgage will come out to be about $1,407 per month. That's a tougher ordeal, but the benefit is that you would save thousands of dollars in . Keep in mind about your amortization period as you arrange your mortgage. You can stretch it long if you want to be comfortable with the monthly payments, although the shorter you can make it, the more you'll save in paying for your home by deducting from the interest..
The "term" is the length of your mortgage agreement and it will typically be shorter. You will have several choices but this will be a very specific period of time. For example, a 6-month mortgage is a very short-term mortgage while a 10-year mortgage will be one of the longest terms. Generally the longer the term, the higher the rate of interest will be. This is due to the higher level of risk in the economic outlook.
Later on when your mortgage term expires, you will need to either pay off the remaining balance of the mortgage principal, or negotiate for a new Ontario mortgage at whatever rates that are available at that present time. - 30462
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