Amortization is the spreading of time for payments that would pay off a mortgage. Usually spread up to 25 years.
The appraisal is the process will determine the value of a property used in the lending process. This value can differ the purchase price of the property.
When there is an outstanding or existing mortgage , a financing arrangement can be made to transfer this from the current owner to the new buyer. Assuming the previous owner’s existing debt, the buyer can avoid the process of trying to obtain their own mortgage.
These are the combined payments consisting of principal and interest and are paid regularly (eg: weekly, biweekly or monthly) for the term of the mortgage. The principal portion of the payment will increase and the interest portion will decrease but keeps the total payment amount of the mortgage the same.
Canadian Mortgage and Housing Corporation – CMHC
Canada’s national housing agency is a division of the Government of Canada (CMHC). Their mandate is to allow Canadians access to the affordable housing options available. They also research real estate housing trends in Canada and around the world. Their major activity and one for which they are best known is the mortgage loan insurance. This insures lenders , such as chartered banks, against borrower default. The mortgage loan insurance will provide the approved borrower access to mortgage rates at a low cost. CMHC approved buys may be able to purchase property with payments as low as 5%.
Certificate of Search or Abstract of Title
This document sets out instruments that are registered against the title of the property such as mortgages or deeds.
The mortgage that cannot be prepaid, refinanced or renegotiated prior to maturity is a closed Mortgage except according to its terms.
Collateral are assets or properties that are offered to secure the credit or loan These are subject to seizure on default.
This is a mortgage that is below 80% of the purchase price of the home. The mortgage that exceeds this limit should be insured against default and are called high-ratio mortgages.
The debt-service ratio is the percent of the borrower’s gross income that is used for the monthly payments of interest, principal, taxes, heating and condominium maintenance fees.
High Ratio Mortgage
When you don’t have the 20% of the purchase price, or less than the appraised value of the property, your High Ratio mortgage must be insured against default by a Mortgage insurer such as CMHC. The availability of the government backed mortgage insurance is only for homes with a value of $1 million or less.
Interest Rate Ceiling
This is the absolute maximum rate of interest that financial institution can charge of the adjustable rate mortgage or loan.
Mortgages are used by businesses and individuals wanting for make large purchases in real estate without paying the total amount up front. They are also known as liens or claims on a property. The instrument of debt secured by collateral of real estate properties where the borrower is obligated to pay back with a predetermined set of payments.
The individual, institution or originating company that sells and services mortgage loans.
The representative that brings together the home buyer and the lender much like a matchmaker that has the goal to originate the mortgage loan. This broker draws from various lenders in order to find the right match.
This is the person(s) that give a loan to a purchaser (borrower) for the purchase of real estate property. When accepting a mortgage on this property, the lender is creating security in the future with full repayment of the loan.
The company of person(s) who borrow money to purchase real estate property. This borrower is granting the lender an interest in the purchased property which enables the lending of funds with accurate knowledge and assessment of risk. This mortgagor provides the lender with the guarantee for the repayment of the loan in full. Known as a “chargor”.
Total Debt Service (TDS) Ratio
The percent of the gross income needed to cover the monthly payments for housing and other debts and all the financing obligations.