Mortgage Info and Rates

It is very important that you do a complete comparison of mortgage rates, terms, prepayment privilege and penalties before you choose who to place your mortgage with.

The mortgage business is very competitive so it pays to shop around, even if you are just renewing your mortgage.

Your Realtor will be happy to assist you and may have special rates that are not available to the general public due to their volume discounts.

Royal Bank of Canada Mortgages		Scotiabank Mortgages
CIBC Mortgages		Bank of Montreal Mortgages
TD Mortgages		Canada Mortgage Magazine

Mortgage Terminology

Amortization Period: _________________________________ back to top

This is the amount of years that it would take to completely payoff your mortgage assuming that you did not miss any payments, make any prepayments and assuming that you kept the same interest rate, and payment amount, while throughout the life of the mortgage. For example, a 15 year amortized mortgage would be paid off in 15 years if you took out a 15 year mortgage and made every payment on time for exactly the amount shown on the mortgage. To be safe, pick an amortization period that results in a monthly payment that is affordable and make periodic prepayments when you have additional funds whenever you are allowed to under the terms of your mortgage.

Assumable:___________________________________________ back to top

This is the clause that determines whether a new person can take over a mortgage with or without prior approval.

Conventional Mortgage:_____________________________ back to top

A conventional mortgage is when the Purchaser has a down payment of at least 25 percent or more of the Purchase Price or Appraised Value, whichever is the lower.

Convertible Mortgages:______________________________ back to top

A convertible mortgage allows you to change some of the terms, as predefined times, usually without penalty. For Instance, you might take out a 6 month open mortgage that can be converted into a closed 5 year mortgage at any time before the 6 month mortgage term comes due.

Disability Insurance:________________________________ back to top

You should make sure that you have insurance coverage to protect you in the event that you become disabled through accident or illness and are unable to make your mortgage payments. These policies will provide replacement income until you are able to return to work. You should check you policy at work to see if you already have adequate insurance.

Down Payment:__________ __________________________ back to top

This is the amount of money that you have available to be applied against the purchase price of the home. Normally, the minimum down payment is ten percent ( 10 % ) unless your are a first time home buyer in which case it is lowered to only ( 5% ). It should be noted that there are ceilings on the sales price under the five percent down payment program, but this program is open to purchasers of new or resale homes.

Equity:______________________________________________ back to top

The equity in your home is the difference between the selling price of the home and the total debts owing against it.

Fire Insurance:______________________________________ back to top

Most lenders will require you to put fire insurance equal to at lesser of the principal of the mortgage or the loan amount. It is important to make sure that you have adequate insurance so that in the event of a fire, that you are fully covered. If you under insure and there is a co-insurance policy, your payout will be prorated based on the percentage that you are under insured by. Your insurance broker will explain this to you in detail.

Gross Debt Service:________________________________ back to top

The principal, interest and property taxes should not exceed 30% - 32% of your gross pretax income.

Guarantor:__________________________________________ back to top

This is a person, that may not be registered on title, that has made a person guarantee to bring the mortgage into good standing should the mortgagor fail to make the payments. Typically this is parents or siblings signing for a family member.

High Ratio Insurance Premium:____________________ back to top

If the Purchaser has less than 25% down payment, the lending institution will require that the mortgage be insured by a mortgage insurance company such as Canada Mortgage and Housing Corp. or GE Capital. These premiums are not paid on closing, they are added to the mortgage principal. This mortgage insurance is also subject to provincial sales tax.

High Ratio Mortgage:_______________________________ back to top

A high ration mortgage is when the Purchaser has less than 25 percent as a down payment or when the equity in the home is less than 25 percent if it is being refinanced.

Job Loss Mortgage Insurance:_____________________ back to top

This is insurance that will cover your premiums in the event that you involuntarily loose your job. This is a fairly new type of insurance but it can add additional comfort to your family if you are concerned about your employment.

Maturity Date:_______________________________________ back to top

This is the date at the end of the term of the mortgage, at which time you can either pay it off completely, or refinance the balance that is outstanding. For example, if you take out a three year mortgage, the maturity date is three years from receipt of the mortgage funds.

Mortgagee:__________________________________________ back to top

This is the lending institution who holds the mortgage.

Mortgagor:__________________________________________ back to top

This is the person that is registered as borrowing the money.

Mortgage Insurance Premium:_____________________ back to top

This is the premium charged when the lender requires that the mortgage be insured. This amount can be paid on closing, but it is usually added to the mortgage principal amount.

Mortgage Life Insurance:__________________________ back to top

Some lenders offer insurance that will pay off the entire balance of the mortgage in the event that you or your spouse dies. This offers excellent protection for your beneficiaries. Some lenders will require that you take out this type of insurance as a condition of the mortgage.

Open versus Closed:______________________________ back to top

An open mortgage can be fully paid off at any time and a closed mortgage requires that you maintain the regular payments as set out in the terms. Closed mortgages usually provide for a penalty if they are discharged early.

Payment Options:_________________________________ back to top

The typical payments are weekly, biweekly or monthly. It is best to pick a payment option that follows your income flow. For example, if you are paid weekly, take out a weekly payment option. The more frequently that you pay, the quicker you pay off the mortgage and the less interest that you pay over the life of the mortgage.

Portability:______________________+_________________ back to top

This is a mortgage option that allows the borrower to transfer the mortgage to their new home, provided that it has the same value or more, without paying a discharge penalty to the lender.

Prepayment Privileges:___________________________ back to top

This is the clause in the mortgage that give you the option to pay a little extra cash when you have it. Each lender has different prepayment privilege but they typically allow you to increase your monthly payment by up to 100% of the normal payment and to pay off a large lump sum of up to 15% of the balance, once a year on the anniversary date of the mortgage.

Principal:__________________________________________ back to top

This is the original amount being borrowed or the amount that is still outstanding on refinancing.

Renewal:__________________________________________ back to top

This is when the mortgage is re-negotiate at the end of the initial term.

Second Mortgage:________________________________ back to top

This is a mortgage that is in second line the the first or primary mortgage. If there is a default, the first mortgage will be paid of in priority and the remaining funds, if available, will be paid to the second mortgagee.

Term:______________________________________________ back to top

This is the length of time that your mortgage is in place. This can vary from fully open, to 6 months and as high as 10 years depending on the lending institutions.

Title:_______________________________________________ back to top

This is the person's name that the home is legally registered to.

Variable Rate Mortgage:__________________________ back to top

This is a mortgage that usually has a fixed payment, but where the interest rate charged may change based on market conditions. As a result of the changing interest rate, the amount applied against the principal can vary dramatically.

Vendor Take-Back Mortgage:____________________ back to top

This is a mortgage where the vendor may hold a mortgage, either first or second, to help facilitate the sale of the property. The Vendor becomes a mortgagee.

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