Mortgage

When you arrange a mortgage to help you with the purchase of a property, you could negotiate the details with your lending institution. 2 pertaining to the items you could decide on could be term including amortization.

The term of your mortgage could be the length of time that you could be locked in to certain payments at a specific interest rate. For example, if you choose a 5 year closed mortgage term, the means that you could have mortgage payments of a certain amount for 5 years. At the end of 5 years, you could have to either pay the remaining amount owing to your mortgagee*, or renegotiate your mortgage. the length of time is usually between 6 months including 5 years, although there are some lending institutions that could provide mortgage terms of 7 or 10 years.

If you choose to either renegotiate your mortgage or pay out your mortgage before the end of your term, you may have to pay a penalty, depending on the agreement contained in your Standard Charge Terms*.

The amortization of your mortgage is the length of time that it will take you, at your current payment including interest rate, to pay your mortgage in full. the amount of time is usually 20 or 25 years, at the time you first arrange your mortgage. As you progress through the years of payments on your mortgage, if you keep your payments similar, the amortization of your mortgage could decrease.

Let's say you have arranged a mortgage with a lending institution for $150,000.00 for a 5 year term at a particular interest rate of 6.5%, with a particular amortization of 25 years. You have agreed to make monthly payments of $1,004.74 on the 1st day of every month. At the end of 5 years, you renegotiate with your lending institution. They could continue to hold your mortgage for a particular additional 5 year term at the same interest rate. By keeping monthly mortgage payments of $1,004.74, you now have a particular amortization of 20 years.

* For a more detailed description of these mortgage terms, read the article, Common Mortgage Terms.

For more information on Mortgages: What is the Difference Between Term including Amortization:

Barb Asselin is a college professor, author including owner of Asselin Group, a particular online publishing company. For more articles relating to real estate, visit http://ontarioproperty.asselingroup.com or visit http://www.asselingroup.com/ebooks-internet.htm for articles including ebooks relating to starting a particular online business. Visit http://www.asselingroup.com to see all that Asselin Group has to offer, including municipal directories, internet business ebooks including articles, recently published articles, information regarding real estate including sign language ebooks.

Written By: Barb_Asselin