Getting To Grips With Mortgage Terminology

1
Getting To Grips With Mortgage Terminology
2

• For most of us, trying to make sense of the
  terminology surrounding mortgages can be mind
  boggling to say the least. But, with this short
  guide to the most commonly used words and terms,
  you can begin to turn nonsense, into sense
• Amortization period
• This is the period in which you will be required
  to pay off your mortgage in its entirety, with
  all conditions met and all payments made on time.
  How much your monthly payments are, is determined
  by the length of the amortization period.

3

• Closing costs
• These describe all of the fees associated with
  buying a home, such as legal fees, transfer fees,
  and disbursements, and are due on the day the
  buyer officially takes ownership of the home.
• Conventional mortgage
• Not typically requiring mortgage insurance, these
  loans are equal to or less than 80 of the value
  of a property.

4

• Deposit
• This is the amount of money that buyers use to
  show they are serious about purchasing a
  property, and is held by the real estate agent or
  a lawyer until the point of sale.
• Equity
• Increasing over time, equity is the cash value of
  a home once the owner has subtracted the mortgage
  or other debts owed on the property.

5

• Fixed rate mortgage
• With an interest rate that is locked in, fixed
  rate mortgages never change for the duration of
  the term.
• Guarantor
• This term describes an individual with an
  established credit rating and earnings that are
  enough to repay the loan on the borrowers behalf,
  should the borrower not be able to.

6

• High ratio mortgage
• These mortgages come from regulated lenders and
  must be insured against default with mortgage
  loan insurance they are for more than 80 of the
  value of the property.
• Interest adjustment date
• Interest adjustment is the amount of interest
  accrued between the closing date and first day of
  the initial mortgage payment the date is
  naturally, the day on which it will begin.

7

• Maturity date
• Your mortgage loan must be paid in full,
  renegotiated or renewed by this date.
• Premium
• If your down payment is less than 20 of the
  purchase price, the premium describes the amount
  you would have to pay to an insurer to insure the
  mortgage against default. Generally, the smaller
  the down payment, the higher your insurance
  premiums will be.

8

• Principal
• This describes the amount you will borrow for a
  loan.
• Renewal
• Once the term of your mortgage has ended, this
  will mean that its up for renewal, and you can
  do so with the same lender or transfer it to
  another at no extra cost.

9

• Term
• A term is the period of time covered by a
  mortgage agreement, and common terms are 6 month,
  1,2 to 4, 5, 7 and 10 years.
• Title
• This registered document shows all legal
  encumbrances filed, and who legally owns the
  property.

10

• Variable rate mortgage
• With a variable mortgage, the interest rate can
  go up or down depending on market conditions, and
  while the payments will usually stay the same,
  the amount of each payment towards the principal
  or the interest on the loan, changes as the rates
  go up or down.
• Working with someone professional like a mortgage
  broker, is a fantastic way to help understand the
  entire mortgage process, and that, coupled with
  your knowledge of the terms listed above, should
  help you get the right mortgage for your
  circumstances and needs.

11

• Mortgage-broker-Calgary is your best resource for
  finding a mortgage for your property. Luke Wile,
  is one of the best Calgary mortgage brokers and
  is proud to serve clients from across Canada,
  while being centered in Calgary, Alberta. Luke is
  proud to serve his clients with a personalized
  approach to finding his clients the best and
  lowest Canadian interest rates and terms offered
  by the major banks and private lending
  institutions. If you are looking for a mortgage
  specialist in Calgary, with Luke Wile you can get
  fast and personal expertise for your mortgage.
  Contact us today!