What is the difference b/t loan term & amortization period for a commerical loan?

I'm purchasing my first 4 flat property for real estate investment. The bank has offered me a loan that has a 10 year term but 20 year amortization period. I'm not sure what this means.

Any help or direction to online resources would be appreciated.

As far as I understand, Term means the years for which your Interest rate is fixed whereas the amortization period is the period till you have to pay everythign back.

This means if your interest rate may change after your term period.

For details, have a look at the following link:

I am not sure.But it may be that the loan repayment doesn't start immediately or you start paying only loans for a period of 10 years and interest payment thereafter.Amortisation means the loan repayment period.

the loan term is the period of repayment. u will pay it back over the course of 10 years. the amortization schedule is how payment amount is derived. specifically its how much principal and interest are in the payment. in the beginning u will be paying almost all interest, the middle will be 50/50, and the end will be all principle (the banks do this to make sure they get their returns if u decide to sell or refinance early). in a normal mortgage they are the same.

in your situation its different because u have a longer amortization term than the loan term. what that means is that u will make payments for 10 years as though u were on a 20 year amortization schedule. at the end of 10 years, u will still have a significant balance left, and there will be a balloon payment due (its a lump sum payment for the remaining balance). at that time, u can either pay the large payment, or you can refinance the balance at the current rates and terms.

That's a balloon loan. Your payments are based on a 20 year loan, but at 10 years the entire outstanding balance will be due. Here's an example:

Loan amount: 拢200,000
Fixed interest rate: 10%

Monthly payments (P & I): 拢1,930.04
Balloon payment at 10 years: 拢157,920.18

As you can see in 10 years you're going to have to either pay the balance off in cash, or refinance the outstanding balance.

If you're getting a discounted fixed rate, and if you know for sure that you will either sell out before the 10 year point OR if you are confident that you will be able to refinance at the 10 year point this may be a good deal.

If this is a variable rate loan there is no way to predict what your payoff will be in 10 years nor what your monthly payments will be even next year. It that case, it's not a very good offer at all.

"Term" means how long you'll have the loan for. The "amortization" is what your payments will be based on.

So, this loan is for 10 years and your payments will be based on a 20-year loan. This results in your monthly payments being less. But at the end of 10 years, when the loan matures, you'll still have a large balance remaining and will need to either pay this off or refinance it.

sounds like your payments are based on a 20 year ammortization, but the loan is due in 10 years. You'll have to refinance or pay it off in full after 10 years.