What is mortgage amortization?

When one refers to the mortgage amortization period, they are referring to the amount of time that it will take until the entire mortgage debt will be repaid. The mortgage amortization period is important, as it affects the amount of interest one will be required to pay on their mortgage, as well as the amount that they will have to put down on their home when they sign the mortgage.

If you obtain an amortization period of less than 25 years, then you will be obligated to pay less interest on your mortgage each month, and will be required to make monthly mortgage payments for a shorter period of time.

If you choose to do this, then you will be required to put down more money when it comes to the principal balance, however this means that you will be mortgage free sooner rather than later.

If, however, you choose to have a 25 year long amortization period, you would pay a larger interest rate over a longer period of time. This means that the amount owed monthly would be less, however due to the extension of the pace of the mortgage, you would end up paying a larger amount of interest in total and would be required to pay your mortgage for an extended period of time.

More frequent payment schedules, like bi-weekly payments, can save interest costs by reducing the outstanding principal balance more quickly.

For more information on mortgage amortization contact Marilyn Krol at Krol & Krol at 905.707.3370, extension 22.