Amortization Period
Definition
- The amount of time it takes to pay off a mortgage. The maximum amortization period in Canada is 30 years. Amortization period should not to be confused with a mortgage term. Over the course of an amortization period, a homebuyer will likely go through multiple mortgage terms whereas the buyer will most likely only go through the one amortization period.
Synonyms
repayment plan, remuneration period
Related Terms and Acronyms
- Amortization — Definition,
- 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 Schedule — Definition,
- 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.
- Amortization Table — Definition,
- A mathematical formula used to calculate monthly mortgage payments based on the borrowed loan amount, the interest rate, and the loan term.
- Amortization Term — Definition,
- The time required to amortize (repay) an entire mortgage loan.
- Lump Sum Payment — Definition,
- One-time single-sum payment or payout.
- An extra payment made to reduce a loan.
- Term — Definition,
- 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.
