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Term of the Mortgage (Long Term vs. Short Term)

Term of the Mortgage (Long Term vs. Short Term) 

A mortgage with a term of three years or more is usually considered to be a long-term mortgage. A mortgage with a term of less than three years is usually considered to be a short-term mortgage.

The length of the term establishes when you will have to repay the mortgage loan or renegotiate the terms of the mortgage. 

To select your term, you should consider the following:

  1. Do you anticipate being able to, or needing to, pay the mortgage back in the foreseeable future. 
    • For example, if you plan on selling your home in 1 year, you would not typically want to take a 5-year mortgage.
  2. How long do you want to keep the conditions of your loan. This is particularly important for fixed rates mortgages, since the interest rate and regular payments remain the same for the term. 
    1. For example, if you value a fixed interest rate because you would like regular payments for at least 3 years, you would want to select at least a 3-year term.  If interest rates are particularly low, you may want to lock into the 5-year term. 

Selecting the term length that is right for you must be done alongside the interest rate type (fixed or adjustable/variable) that you are selecting, and how long you require the mortgage. 

Always consult your mortgage disclosure and/or your mortgage professional when deciding what product is right for you.  Review your mortgage disclosure/ documentation to understand the terms and conditions that relate to your mortgage.