Ontario Mortgage Agent Practice Exam 2026 - Free Mortgage Agent Practice Questions and Study Guide

Amortization in mortgage terms refers to the process of repaying a loan through scheduled payments, which typically include both principal and interest over a set period. This structured repayment plan allows borrowers to pay off their mortgage gradually, reducing the outstanding balance with each payment until the loan is fully satisfied at the end of the amortization term, often lasting 15 to 30 years.

The key aspect of amortization is that each payment goes towards decreasing the principal balance, as well as covering the interest that accrues on the remaining loan amount. This ensures that by the end of the term, the borrower has completely repaid the loan, making it a fundamental concept in understanding how mortgages work.

Other options do not accurately capture the essence of amortization. While they discuss various aspects related to mortgages, they do not define the core principle of how a mortgage is structured and repaid over time.