What is the difference between Term and Amortization?
Q.... What is the difference between Term and Amortization?
from Zoocasa Ask the Pros
A....In Canada "Term" and "Ammortization" are different because our mortgages must come "open" for penalty-free repayment once ever 5 yrs.
Since that law was changed interest rates/arrangements are for a TERM and the payments are based on an "Ammortization" period that (almost always) differs in length.
Term is the period of time that the Lender (Mortgagee -"gee" I like the interest) and Borrower (Mortgagor) establish as the length of time that the "interest rate agreement" (can be fixed or variable) is in place.
Ammortization is the (arithmetically calculated) period of time used to base the blended monthly payments in order to retire the principal and pay all the interest (ie if the interest rate never changed throughout that period)
from Zoocasa Ask the Pros
A....In Canada "Term" and "Ammortization" are different because our mortgages must come "open" for penalty-free repayment once ever 5 yrs.
Since that law was changed interest rates/arrangements are for a TERM and the payments are based on an "Ammortization" period that (almost always) differs in length.
Term is the period of time that the Lender (Mortgagee -"gee" I like the interest) and Borrower (Mortgagor) establish as the length of time that the "interest rate agreement" (can be fixed or variable) is in place.
Ammortization is the (arithmetically calculated) period of time used to base the blended monthly payments in order to retire the principal and pay all the interest (ie if the interest rate never changed throughout that period)
posted by Walk a Kb or Two in my cassins | 8:04 am
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