Walk a Kb or Two in my Moccasins- Nobody 'splained it to me like that!

Simple answers to Complex Questions and Complex Answers to Simple Questions. In real life, I'm a Greater-Toronto (Canada) Realtor with RE/MAX Hallmark Realty Ltd, Brokerage. I first joined RE/MAX in 1983 and was first Registered to Trade in Real Estate in Ontario in 1974. Formerly known as "Two-Finger Ramblings of a Forensic Acuitant turned Community Synthesizer"

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Tuesday, September 14, 2010

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)

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