The term of a mortgage is the period of the loan where it’s monthly payment is calculated.
Sometimes also called a tenor or tenure, it is generally accepted that the longer the term stretches on a home loan, the lower the monthly payment would be.
However it must be noted that the relationship between the payment amount and the term is a reducing decrease relationship.
This means that the amounts reduced as terms increase becomes smaller the longer the term.
For example, extending a term from 10 to 20 years will see a more significant decrease in monthly payment amounts compared to extending from 20 to 30 years.
The other side of the coin is that the shorter the term a borrower takes up, the faster the equity builds up in the house.
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