Q
A |
How do I take equity out of
my existing home for personal reasons? Are there any restrictions?
Provided you have a minimum
of 25% equity in your house (based on a current appraisal
on your property), we may be able to renegotiate your
mortgage so you can take out equity to buy a new car,
home renovations, etc. Some restrictions apply.
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Q
A |
What does a mortgage broker
do?
A mortgage broker works on
your behalf to provide insight and knowledge with respect
to many lenders' products and policies. He/She is aware
of market trends and present mortgage rates and can
provide you with a mortgage product best suited for
your individual needs.
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Q
A |
How much does he/she charge
for service?
In today's environment a typical
mortgage broker is paid by a lender for an applicant
that meets prime underwriting guidelines. The costs
to the borrower is usually zero but there are cases
where a fee will be payable. Borrowers will be made
aware of costs if they will apply.
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Q
A |
What are the advantages in
using a mortgage broker?
A broker can save you not only
time, but also heartache. With the experience and knowledge
gained by specializing, the broker will ask you all
the right questions to present your application in its
best possible light. By giving the information to the
broker, he then can present it to the lender in a form
the lender will accept, in turn making the mortgage
application experience less stressful.
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Q
A |
What are the benefits of applying
for a preapproved mortgage?
A preapproved mortgage is a
preliminary approval of your application to a maximum
amount at a fixed rate. It tells you exactly how much
you can afford to spend on your home and what your payments
will be. Your rate is fixed for a certain period which
means that if rates go up during that period, you keep
your fixed rate but if they go down at time of your
purchase, you get the lower rate.
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Q
A |
What is mortgage default insurance?
If your downpayment on your
purchase is less than 25% of the value of the property,
your mortgage must be insured against payment default
by a government agency or approved private insurer.
You will have to pay a one-time premium which can be
added to the principal amount of your mortgage.
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Q
A |
How can I pay off my mortgage
faster?
There are a couple of options
available to you:
1) take advantage of all prepayment
privileges allowed by your lender,
2) make accelerated payments as frequently
as possible, i.e. weekly instead of monthly,
3) choose the shortest possible amortization
period.
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| Bridge
Financing
A special short-term loan needed
to cover (bridge) the gap in time between completing
the purchase of one property and finalizing arrangements
to pay for it. This is often the result of mismatched
closing dates.
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|
CMHC
Canada Mortgage and Housing
Corporation, a Crown Corporation which administers the
National Housing Act.
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| Down
Payment
The amount of money (in the
form of cash) put forward by the buyer toward the purchase
price of a home.
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| Gross
Income
The scheduled income from the
operation of the business or the management of the property,
customarily stated on an annual basis. Also refers to
the total personal income (from all sources) of an individual,
before taxes and other deductions.
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|
Guarantor
A third party person without
interest in the property who agrees to assume responsibility
for a debt in the event of default by the mortgagor.
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| Maturity
Date
The last day of the term of
the mortgage agreement. The mortgage must be paid in
full or the agreement renewed by the maturity date.
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| Mortgage
Insurance Premium
A premium which is charged
as a percentage of the mortgage. The mortgage insurance
insures the leader against loss in case of default by
the borrower.
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| Mortgage
Life Insurance
A form of reducing life insurance
recommended for the borrower. In the event of death
of the borrower or one of the co-borrowers, the insurance
pays the balance owing on the mortgage. The intent is
to protect survivors from losing their home.
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|
Mortgagee
The lender of the money. The
holder of the mortgage.
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| Mortgagor
The one who makes the payments.
The owner of the property (the borrower).
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| National
Housing Act Loan
A mortgage backed (insured)
to a certain maximum by CMHC or an approved private
insurer.
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| P.I.T.
Principal, interest and property
taxes due on a mortgage.
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| Portable
Mortgage
Upon the consent of the lender,
the mortgagor may transfer the balance of their existing
mortgage to a new property being mortgaged.
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| Pre-Approved
Mortgage
Preliminary approval by the
lender of the borrower's application for a mortgage
to a certain maximum amount and rate. Usually conditional
upon the property being purchased meeting the lender's
criteria.
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| Principal
The amount of money borrowed.
Could be part of the repayment plan that lowers this
original amount.
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| Second
Mortgage
A mortgage placed on real property
which is already encumbered with one mortgage. Determination
of first, second, third etc. mortgage is by priority
of registration (time and date).
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| Variable
Interest Mortgage
A loan where the interest rate
may vary during the term of the mortgage. The variance
is usually tied to some specific factor such as prime
bank rate or the guaranteed investment certificate rate
for a designated lender.
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| Vendor
Take Back Mortgage
A mortgage which a vendor of
real property takes from the purchaser usually as part
payment of the purchase price for that property. A private
first or second mortgage where the vendor lends to the
purchaser.
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