Amortization Period


Total length of time it will take you to pay the mortgage off in full. The most popular amortization in Canada is 25 years, but other periods are available (for example, extended amortization of 30 years, or, oppositely, shorter periods). The longer the amortization period, the lower the amount of each payment, but much more interest will be paid over the life of the mortgage.

Term


The length of time for which your mortgage agreement with a lender (i.e. the length of time for which options are chosen and agreed upon, such as the interest rate) is valid. It can be as little as six months or as long as five years or more (up to 10 years). When the term is up, you have the ability to renegotiate your mortgage at the interest rate of that time and choose the same or different options.

Usually, an amortization period consists for a few terms (for example, a 20-years amortization period could consist of four 5-years terms) - except in cases where the mortgage amount is small and can be completely repaid in one term.

The mortgage contract will indicate the time that the contract will be in force. After this time expires the contract must either be paid in full (referred to as paying the lender a balloon payment) or renewed with the current lender. These are the only two options that a borrower has.

Refinancing with the current lender has the same effect as making a balloon payment since the mortgage is paid out by the new loan. In essence, the lender is giving itself the balloon payment. The same occurs with a switch or a transfer of the mortgage from one lender to another. In this case, the mortgage is paid out through a balloon payment made by the new lender.

Your freedom to change the mortgage paying conditions during the term depends on prepayment options listed in the contract.

More information can be found in the site of Financial Consumer Agency of Canada: Choosing an amortization period: What is the impact on your mortgage?.

Payment Frequency


  • Monthly (12 payments per year). Most popular option.
  • Twice a month (24 payments per year).
  • Bi-weekly (26 payments per year). Many people get paid every two weeks, so the bi-weekly mortgage payment schedule coordinates with their payday schedule.
  • Weekly (52 payments per year).
Whatever the frequency is, payments can be accelerated or not.

Down Payment


Please read here.

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Once you are interested in obtaining a mortgage, then you most likely will also be interested in the help of an experienced real estate agent:

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