You may have heard the word “amortization” thrown around in the financial world. The definition of amortization is the act of paying off debt in regular installments over a period of time. It applies directly to your mortgage! Why you ask? Simple, because the amortization of a mortgage refers to the total number of years required to pay back the entire borrowed amount.
Until recently, in Canada, the longest amortization period on a mortgage was 25 years. Now, some lenders offer an amortization of up to 40 years. Some people prefer a longer amortization period to ensure smaller mortgage payments. However, it can be to your advantage to choose the shortest amortization that you can afford because in the long run, you will save thousands of dollars in interest. Continue reading →