There are many words used in the mortgage process of which you need to know what they mean and most important why are they important!!! Mortgages can be complex and sometimes even a bit scary however if you are given the explanations during your mortgage application, commitment and throughout your mortgage life it will take away those fears!!!
The length of time for locking in your interest rate and the length of time you choose works for your situation as well. Terms can vary from 6 months to 10 years with each one having a different rate attached to them. Lenders buy their money to lend to you from various sources and those cost the lender different amount of interest depending in lots cases on how long they choose from their end as well. The lender then passes on to you the rate depending on the length of your term. You are locked into that term along with the rate that applies from the lender your choose. the lender has a contract with you and you have a contract with them, they will not break that contract unless you start missing your payments. You can however choose an OPEN rate mortgage however beware as those can be costly
In summary, a term is the length of time your interest rate is held for and you can choose. There will be policies with different lenders how you are allowed to pay over and above the required amount and we will discuss that in another blog.
