- A schedule or table that details the life of the loan or the amortization. This schedule includes the principal amount owing at the origination of the loan, period payments, interest paid on each payment, principal reduction on each payment, and the final balance. CanEquity has created a mortgage rate calculator to generate a sample amortization schedule to give clients a better understanding of how amortization works.
interest, payment cycle, principal, amount, balance
Related Terms and Acronyms
- Amortization — Definition,
- Amortization refers to the process of gradually paying down the principal of a loan. Each payment toward the principal reduces your loan by that amount. This is different than an interest-only loan payment where the principal balance is never reduced. Amortization for a mortgage loan in Canada is normally 25 years, but can be as few as 5 years.
- Amortization Period — Definition,
- The amount of time it will take to pay off a mortgage by making routine payments.
- Amortization Term — Definition,
- The time required to amortize (repay) an entire mortgage loan.
- Amortized Loan — Definition,
- A loan that is completely paid off, interest and principal, by a series of regular payments that are equal or nearly equal.
- Annual Mortgage Statement — Definition, Important,
- A report sent to the borrower every year, detailing how much principal remains on the home loan and how much was paid in taxes and interest during the previous year.
- Interest Adjustment Date — Definition,
- The date one month prior to the beginning of amortization when accrued interest computed on the monies advanced becomes due.
- Pre-computed Loan — Definition,
- With a pre-computed loan, the interest owed over the life of the loan is calculated using a standard amortization table. After signing for this type of vehicle loan, the borrower is obligated to pay back principal plus the full amount of interest that will accrue over the entire term of the loan.
- Rate Cap — Definition,
- A limit on how much the interest rate can change, either at each adjustment period or over the life of the loan.
- Term — Definition,
- The length of time you commit to repay a lender or bank at an agreed upon interest rate and payment schedule. The interest rate usually remains constant during this term unless the commitment states otherwise. For example, a five year fixed rate mortgage has a term of five years.
- Year-end Statement — Definition,
- A report sent to the borrower each year. The report shows how much was paid in taxes and interest during the year, as well as the remaining mortgage loan balance at the end of the year.