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Amortization vs term, explained

By Francis, Mortgage Expert · 4 min read · Updated July 22, 2026

Two words people mix up constantly: amortization and term. They mean very different things, and understanding the difference helps you plan.

Amortization

The total time to pay off your mortgage in full - commonly 25 years. A longer amortization lowers your payment but increases the total interest you pay.

Term

The length of your current contract with a lender - commonly 5 years. At the end of the term you renew the remaining balance at a new rate, until the mortgage is fully amortized.

Why it matters

You'll go through several terms over one amortization. Each renewal is a chance to shop rates - and shortening your amortization (via extra payments) is one of the most effective ways to cut lifetime interest.

Have questions about your situation? An advisor can walk you through it.

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