Short Term or Long Term
The term is the length of the current mortgage agreement. A mortgage typically has a term of 6 months to 10 years. Usually, the shorter the term, the lower the interest rate.
A short-term mortgage is usually for 2 years or less. A long-term mortgage is generally for 3 years or more. Short-term mortgages are appropriate for buyers who believe interest rates will drop at renewal time. Long-term mortgages are suitable when current rates are reasonable and borrowers want the security of budgeting for the future. The key to choosing between short and long terms is to feel comfortable with your mortgage payments. After a term expires, the balance of the principal owing on the mortgage can be repaid, or a new mortgage agreement can be established at the then-current interest rates.