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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Amortization Term


Synonyms:amount, pay-off, remuneration, repayment, settlement, sum
Filed Under: financial-banking, mortgages
Tags: banking, lending, loan, mortgage, rates
 

Definition of amortization term

amortization term
1. The period of time that is required and agreed upon to repay (amortize) an entire mortgage loan.

Related Terms and Acronyms:

  • amortization   Amortization refers to the process of gradually paying down the principal of a loan. Each payment toward the principal reduces your loan by that amount. This is different than an interest-only loan payment where the principal balance is never reduced. Amortization for a mortgage loan in Canada is normally 25 years, but can be as few as 5 years.
  • amortization period   The amount of time it will take to pay off a mortgage by making routine payments.
  • amortization schedule   A detailed table showing the amortization of a loan which includes the beginning principal amount, period payments, the interest portion of each payment, the principal reduction portion each payment, and the ending balance. The Canadian Equity Group has developed a mortgage rate calculator which will generate a perfect example of an amortization schedule.
  • loan term   The period specified in the promissory note for a borrower to pay a loan, such as a mortgage. Most conventional mortgages have a loan term of 5 or 10 years.
  • term   The length of time you commit to repay a lender or bank at an agreed upon interest rate and payment schedule. The interest rate usually remains constant during this term unless the commitment states otherwise. For example, a five year fixed rate mortgage has a term of five years.

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