There are usually many 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 primer 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 length of time that would be required to reduce your mortgage loan to zero, based on calculated payments at a set 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.
If you want to tell your broker that you'd like to be mortgage-free in just 10 years then that would be an amortization period of 10 years. With the same interest rate, your $130K mortgage will cost you about $1,407 per month. That's a tougher monthly payment, but you would save thousands of dollars in . Remember about your amortization length 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 subtracting 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. Usually the longer the term, the higher the rate of interest will be. This represents the higher stage of risk in the economic outlook.
After your mortgage term expires, you will need to either pay off the rest of the balance of the mortgage principal, or negotiate for a new Ontario mortgage at whichever rates that are available at that time. - 31377
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 length of time that would be required to reduce your mortgage loan to zero, based on calculated payments at a set 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.
If you want to tell your broker that you'd like to be mortgage-free in just 10 years then that would be an amortization period of 10 years. With the same interest rate, your $130K mortgage will cost you about $1,407 per month. That's a tougher monthly payment, but you would save thousands of dollars in . Remember about your amortization length 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 subtracting 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. Usually the longer the term, the higher the rate of interest will be. This represents the higher stage of risk in the economic outlook.
After your mortgage term expires, you will need to either pay off the rest of the balance of the mortgage principal, or negotiate for a new Ontario mortgage at whichever rates that are available at that time. - 31377
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