Mortgage Term

How it works

Everything in your contract applies only for the term: the interest rate, the prepayment privileges, the penalty formula, and the payment schedule. When the term ends, the remaining balance comes due and you sign a new agreement.

Shorter terms give you more frequent chances to change lenders or products without a penalty, but they expose you to whatever rates exist at each maturity. Longer terms buy stability at the cost of flexibility, and a longer fixed term usually carries a larger penalty if you break it early.

Choosing a term is mostly a question of your plans. If a move, a sale, or a major financial change is likely within a few years, a shorter term or a more flexible product often costs less overall than a low rate with an expensive exit.