Mortgage term

Definition

The period during which the rate and conditions of the agreement apply, most often one to five years, sometimes up to ten. At the end of the term, the balance is not repaid: you renew, switch, or pay it off. A shorter term renews more often, with the risk and the chance that rates have moved; a longer term buys stability, but leaving early costs a penalty. Example: you expect to sell in three years. A five-year fixed term exposes you to an interest rate differential at the sale; a three-year term, or a portable product, avoids the problem even if the starting rate is slightly higher. The term is chosen on your real timeline, not on the lowest rate in the grid.