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The amortization period refers to the length of time a borrwer spreads their payments over to pay off a mortgage. While conventional mortgages are generally either 25 to 30 years in length, the Alternative Lending side may consider up to 50 years.

The amortization period directly affects the amountof the mortgage payments. A shorter amortization period will result in higher monthly payment, but it forces the borrower to pay off the mortgage faster which saves on interest costs. A longer amortization period will result in lower monthly mortgage payments, but unless the borrower excersises pre-payment privaledges, they will pay more in interest over the life of the mortgage and require an additional 5 years to payoff the loan.

The maximum amortization period for insured mortgages (mortgages with a down payment of less than 20% that are backed by mortgage insurance) is 25 years. For conventional uninsured mortgages, the maximum amortization period is 30 years.

It is important to consider the amortization period and choose an amortization period that you are comfortable with based on your financial situation.

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