Term
Definition
The length of your current rate and contract — typically 1 to 10 years.
Distinct from amortization (total payoff length). 5-year fixed is the Canadian default.
Term is how long your rate and contract are locked; amortization is how long until the mortgage is fully paid. A 25-year amortization is paid across several terms — most commonly a string of 5-year terms, each renewed at the rate of the day.
Choosing a term is really a rate-cycle bet. A 5-year fixed buys certainty; a shorter 1–3 year term keeps you flexible to renew sooner if you expect rates to fall; a variable lets you ride prime up or down. Shorter terms generally mean more frequent renewals (and more chances to shop).
Match the term to your plans: if you might sell, refinance, or expect a financial change, a shorter or more flexible term avoids penalties down the road.
Sources
- Mortgage terms and amortization (Financial Consumer Agency of Canada)
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