Amortization
The length of time to pay off the mortgage in full
Cashback Mortgage
A percentage of the mortgage is determined and paid at closing to homeowner. You pay a higher rate or interest to obtain this type of morgage
Closed Mortgage
A penalty will be levied if the mortgage is paid out before the original term is due
Conventional Mortgages
When there is a no risk insurance required. Usually more than 20% equity (i.e. value of property $100,000, mortgage is $80,000; therefore 20% equity)
Equity
Difference between the value of the property and the mortgage owed against the property
Fixed Rate
Constant interest rate charged for a set period of time
High Ratio / Insured Mortgages
If you have 0 to 19% downpayment or equity with regard to the value of your home and mortgage owed against - by law the mortgage has to be insured
Home Equity Line of Credit (HELOC)
A limit of credit is established by the equity in your property. This works like an overdraft on your account, you withdraw and deposit $ to the account. Security is the property
Insurers
There currently (2008) are three mortgage insurers in Canada: CMHC, Genworth and AIG.
Open Mortgage
Mortgage may be paid in full at any time without penalty
Penalty
When a mortgage is paid off in full prior to the end of the contracted term. A penalty is charged by the lender/bank.
Pre-Approval
Personal and financial information gathered, a credit check completed and a commitment issued by lender
Pre-Qualify
Personal and financial information gathered, NO CREDIT CHECK, NO COMMITMENT issued from lender
Prime Interest Rate
A floating interest rate charged by lender to clients
Refinance
Alterations are made to your mortgage to re-negotiate your mortgage without selling your home
Term
The interest rate is set for a term (i.e. 3 yr, 5 yr.) at which time the mortgage is either renewed for an addition term or paid off in full
Variable Rate
Interest rate fluctuates higher or lower as prime interest changes
January 21, 2018