What Does Amortization Mean?
WHAT DOES AMORTIZATION MEAN?
The amortization period is simply the length of time needed to pay off your mortgage, with interest. Typically, amortizations vary between 5 and 35 years. The most common amortization period is 25 years.
You can shorten your amortization period by making additional lump sum payments or by increasing your regular payment. This can save you thousands of dollars in interest expenses.
The maximum amortization for a mortgage with less than 20% equity is 25 years.
If you have more than 20% equity, mortgage of 30 or 35 years is available. Having a longer amortization will make your monthly payment smaller.
The amortization period is different from your mortgage term. Your term is the length of your contract with your current lender. The most common term is 5-years. When your term ends, you are free to renew with your current lender of transfer to a new lender.