amortization period

noun

The total period of time over which a loan will be repaid.

The amortization period of a loan should not be confused with the loan term, which is the amount of time the money is actually loaned for.

For example, a mortgage loan might have an amortization of 25 years, but a loan term of only 3 years.

When applying for a mortgage loan, the amortization period is used to calculate the monthly payments. (Longer amortization periods result in smaller monthly payments.)

A longer amortization period can also help to qualify a borrower for a higher loan amount.


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