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Legal Ease
Legal Ease, Lawyer
Category: Canada Law
Satisfied Customers: 96464
Experience:  Lawyer
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Buyer agrees to give and Seller agrees to take back a

Customer Question

Buyer agrees to give and Seller agrees to take back a mortgage in the amount of $240,000.00 to be credited against the purchase price, on the following terms:
a) Secured property etc...
b)Term: Three (3) years
c) Amortization period: Twenty-five (25) years
d) Payments Monthly etc
e) interest rate: 3%
f) Payment amount etc. etc.
Buyer agrees to pay the balance of the Purchase Price of 149.000 in full etc.
My lawyer explained item b) Term 3 y3ars counts not it3em c). If the amortization period of 25 years is irrelevant why put it in?
Your opinion please.
Submitted: 1 year ago.
Category: Canada Law
Expert:  Legal Ease replied 1 year ago.

It is irrelevant because you have a fixed term agreement for three years. The amortization term essentially sets how many payments would be made and for what amount and that's what the monthly payment is. The calculation is done by saying that the entire property must be paid off by that length of time. So using a 25 year amortizatuon payment schedule means that if you paid this amount of money for every month for the next 25 years then your debt would be paid off. But you already have figured out what do you must pay so you don't need to understand what the amortization schedule means.

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