Every profession, sport and hobby has its own expressions, jargon, and acronyms that can leave those less familiar with them a little lost or confused. Helping our clients understand the language of money is one of the things our coaches take pride in, because we want to ensure that we are always talking with you, not at you.

To that end, we’ve decided to start a glossary of terms we are often asked to clarify, and what better time to begin than November, which is Financial Literacy Month in Canada.

Here are four terms related to home ownership:

Term of a Mortgage vs. Amortization period 

The mortgage term is the number of years the loan is valid. Mortgage terms range from six months to 10 years. Mortgage rates vary depending on the term, usually the lower the rate the shorter the term. At the end of the term, if the mortgage is not paid off, it will be renegotiated at a new rate for a new term.

The amortization period is the number of years it will take to pay off the entire mortgage. Usually the more years over which you spread the mortgage, the smaller the monthly payment will be, but, and it’s a big but, the longer you take to pay the mortgage the more you will pay in interest over the long term. Continue reading →