Amortization is one of those words that perhaps causes your eyes to glaze over and a yawn to appear on your mouth. But it is very important that you understand what it is and how it impacts your mortgage.
Firstly, the basics – what exactly is ‘mortgage amortization’ this and how does it differ to a ‘mortgage term’? Well the answer is pretty straight forward:
The amortization options available to you depend on what stage you are at with your mortgage:
PAYING YOUR MORTGAGE OFF FASTER
Amortization is the maximum amount of time you’re required to take to pay off your mortgage. You can choose to pay it off faster, of course and the most common method of doing this would be by making pre-payments.
A better way of thinking about it, is that your mortgage amortization dictates the minimum payments you must make every month. This is where thinking about the decision can be important as you can reduce your monthly payment by taking a higher amortization – which could be useful for cash-flow and give you more financial flexibility.
So before you skip over this important mortgage term, think about what is best for you and your situation. Our mortgage professionals are happy to answer any questions you might have about this.