What is a mortgage term?
A mortgage term is when you are committed to a mortgage rate, lender, and conditions set out by that lender. The mortgage term you choose will affect the period and interest rates you are protected and the amount of principal you pay to your lender.
Mortgage terms can vary in length from six months to ten years. In Canada, the most popular term is five years. The mortgage depends on your financial situation, short-term and long-term goals, and risk tolerance.
What is important to consider about a mortgage term?
Keeping your mortgage term short reduces the monthly interest charges when mortgage rates are low. Conversely, when mortgage rates are relatively high, keeping the length of your mortgage term longer avoids a sudden increase in the monthly interest charges.
Choosing the right mortgage term and taking full advantage of it is key to reducing mortgage payment costs.
The mortgage term you choose will directly impact your monthly payments. This makes choosing the right mortgage term a very important choice. You must choose a mortgage term that suits your financial situation and goals. We can provide the advice you need to make to choose the right mortgage term. Just reach out!