Amortization mortgage affect almost all homeowners but what is an amortization mortgage? If you’ve bought a house before, you probably have an idea what amortization mortgage is. But for potential homeowners lets clarify this term because amortization mortgages just escape those who don’t have a solid financial education background.

So what is Amortization Mortgage:

Simply as CMHC defined it: Amortization is the period of time (such as 25 or 30 years) and I added that  a mortgage is the amount of money you owed to a lender.

Here is another definition: A debt of which the periodic repayments are used to reduce the principal outstanding as well as paying off the current interest charges.

     Based on given definition, we can therefore safely conclude that an amortization mortgage is an amount of money owed that is to be paid off by a certain date. You then pay off  an amortization mortgage in equal monthly installments, Yes, for most of us that big chunk of money that is automatically withdrawn from our bank account on a monthly basis. One example of an amortization mortgage is one that involves your car loan or your home loan. However, your credit account cannot be considered an amortization mortgage since it does not involve a fixed date for payoff.

    Your monthly amortization mortgage payment is divided into two portions – one for the principal amount and the other for the interest cost. Principal amount being the money originally borrowed while interest is the percent growth of the money as time goes.

    Amortization mortgage interest is computed based on the current amount owed. Thus the longer you’ve been paying for an amortization mortgage, the lower the interest becomes.

To speak to a Mortgage Professional in Calgary, Alberta, call Sybil Hope at 403 831 2246