- When dealing with a mortgage, term refers to the length of time in which a borrower agrees to pay back the lender. The interest rate and payment schedule is also predetermined. The interest rate typically stays constant during the term unless otherwise specified in the loan agreement. For example, a five year fixed rate mortgage has a term of five years.
- A limited or set period of time.
period, time, length of action, predefined duration, extent of time
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 Schedule — Definition,
- A detailed table showing the amortization of a loan which includes the beginning principal amount, period payments, the interest portion of each payment, the principal reduction portion each payment, and the ending balance. The Canadian Equity Group has developed a mortgage rate calculator which will generate a perfect example of an amortization schedule.
- Amortization Table — Definition,
- A mathematical formula used to calculate monthly mortgage payments based on the borrowed loan amount, the interest rate, and the loan term.
- Amortization Term — Definition,
- The time required to amortize (repay) an entire mortgage loan.
- Conventional Mortgage — Definition, Important,
- A mortgage that is not insured or guaranteed by CMHC or GE Capital.
- Fixed Instalment — Definition,
- Periodic (usually monthly) payment on a loan whose sum does not vary.
- Guaranteed Investment Certificate (GIC) — Acronym, Important,
- An investment that pays a set rate of interest over a fixed period of time.
- Insurance Renewal — Definition,
- Extending the term length on an insurance policy.
- Loan Term — Definition,
- The period specified in the promissory note for a borrower to pay a loan, such as a mortgage. Most conventional mortgages have a loan term of 5 or 10 years.
- Lock-in — Definition,
- A lender's guarantee that the mortgage rate quoted will not change for a specific period. The borrower wants the lock to stay in effect until closing.
- Lump Sum Payment — Definition,
- An extra payment made to reduce a loan.
- One-time single-sum payment or payout.
- Mortgage Calculator — Definition, Very Important,
➥ CanEquity's mortgage calculator has been rated number one by the Globe and Mail.
- A program that calculates the costs involved in a mortgage or determines what kind of mortgage a person can qualify for.
- Mortgage Renewal — Definition, Very Important,
- A renewal as it pertains to the mortgage industry is defined as having an existing mortgage term end and signing a new term to continue.
- Period of Indemnity — Definition,
- The amount of time where insurance benefits are required to be paid by an insurance policy.
- Porting — Definition,
- A portable mortgage allows you to transfer the terms and conditions from an existing property loan to a new property loan.
- 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.
- Principal — Definition,
- The original balance of money lent on an outstanding loan and fees, excluding interest. Also the remaining balance of a loan, excluding interest.
- Promissory Note (PN) — Acronym,
- A written promise to repay a loan by a specified time.
- Remaining Term — Definition,
- The time it will take to pay off the rest of an instalment loan as scheduled.
- Term Deposit (TD) — Acronym,
- An investment product in which you deposit a fixed sum of money for a set period of time and are paid interest.
- Term Life Insurance — Definition,
- Life insurance that provides coverage for a set period of time, often from five to forty years.
- Term Loan (TL) — Acronym, Important,
- A loan intended for medium-term or long-term financing to supply cash to purchase fixed assets such as machinery, land or buildings or to renovate business premises.
- Yearly Renewable Group Term Insurance — Definition,
- A group insurance policy that is annually reviewed to keep premiums manageable.