A Glossary Of Essential Mortgage Terms

Author: Tania Dube Mortgages | | Categories: Best Mortgage Broker , Courtière hypothécaire Calgary , Debt Consolidation , First Time Home Buyer , French Mortgage Broker Calgary , Mortgage Broker , Mortgage Broker Cochrane , Mortgage Pre-Approval , Mortgage Rates , Mortgage Refinance , Mortgage Renewal , New to Canada Mortgage

Blog by Tania Dube Mortgages

Every industry has its own language and terms. These words and phrases can be confusing to anyone who is not part of the daily operations of a specific industry, and the mortgage business is no exception. 

To help you understand the terms, acronyms, and phrases regularly used in the mortgage industry, Mortgages with Tania Dube has created this handy reference guide. Here you’ll find valuable information allowing you to comprehend and communicate your mortgage needs effectively.

A mortgage is a security interest given in the property you are purchasing, which secured repayment of the loan related to the property. That security interest is discharged on payment of the principal and interest owning on the loan in accordance with the mortgage documents.

Mortgage Term
The length of time you’re committed to a mortgage rate, lender, and associated conditions.

Mortgage Loan Insurance
Mortgage loan insurance is required for residential mortgage loans with a loan-to-value ratio of more than 80% and is available from CMHC or a private company. Because mortgage loan insurance protects the lender against losses in the event that a borrower fails to pay his or her mortgage, it enables more Canadians to purchase their home earlier, at competitive interest rates, and benefit from the growth in home equity sooner.

Maturity Date
Maturity date is the last day of the term of the mortgage. On this day, the mortgage loan must either be paid in full, or the agreement will be renewed.

Amortization is the length of time over which the debt will be repaid.

An appraisal is the process for estimating the market value of a property.

Closing Costs
Closing costs are costs in addition to the purchase price of the home, such as legal fees, transfer fees, and disbursements, that are payable on closing day. They range from 1.So/o to 4o/o of a home, selling price.

Closed Mortgage
In some cases, a closed mortgage cannot be paid off, in whole or in part, before the end of its term. ln other cases, the lender may allow for partial prepayment in the form of an increased mortgage payment or a lump sum prepayment. However, any prepayment made above stipulated allowances may incur penalty charges

Open Mortgage
Open mortgage is a flexible mortgage that allows you to pay part before the end of its term.

Down payment
Down payment is the portion of the home price that is not financed by the mortgage loan. The buyer must pay the down payment from his/her own funds or other eligible sources before securing a mortgage.

Gross Debt Service Ratio (GDS)
The percentage of the gross income that will be used for payments of principal, interest, taxes and heating costs (P.l.T.H.) and 5Oo/o of any condominium maintenance fees or 100o/o of the annual site lease for leasehold tenure.

Total Debt Service Ratio (TDS)
The percentage of gross income that will be used for payments of principal, interest, taxes, and heat ( P.I.T.H.) and other debt obligations, such as car payments or payments or other loans.

The difference between the price for which a home could be sold and the total debts registered against it. Equity usually increases as the mortgage is reduced through regular payments. Market values and improvements to the property may also affect equity.

High Ratio Mortgage
A mortgage loan higher than 80% of the lending value of the property. This type of mortgage must be insured by Canadian insurers for the benefit of the approved lender against payment default.

Fixed Mortgage Interest Rate
Fixed mortgage interest rate is a locked-in rate that will not increase for the term of the mortgage.

If you’re looking for a mortgage broker in Calgary, AB, reach out to Tania Dube at Mortgages with Tania Dube. As a Mortgage Alliance professional, I can find the perfect mortgage solution for your financial situation. I offer professional mortgage services to clients across Cochrane, Airdrie, Okotoks, Calgary, Bragg Creek, Chestermere, Langdon, and all Alberta. 

To learn more about how I can help you, please click here. If you have any questions about obtaining a mortgage, please get in touch with me here