Loan Term
Quick Definition
The length of time you agree to specific loan conditions before renewal.
Full Explanation
The loan term (or mortgage term in Canada) is the period during which the interest rate, payment schedule, and other conditions of the loan are fixed. Common mortgage terms in Canada are 1, 2, 3, or 5 years. At the end of the term, you must renew, refinance, or pay off the remaining balance. The term is different from amortization — a 5-year term mortgage may have a 25-year amortization, meaning you'll renew 5 times before the loan is fully paid off.
Related Terms
Amortization
The total length of time to pay off a loan through scheduled payments.
Fixed Interest Rate
An interest rate that stays the same for the entire loan term.
Variable Interest Rate
An interest rate that fluctuates based on the prime rate.
Mortgage Renewal
Renegotiating mortgage terms at the end of a term without refinancing the full mortgage.
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