Pre-Approved Mortgage - this
pre-qualification allows you to shop for a house, and know
exactly what you can afford
Conventional Mortgage - this
is a standard mortgage that does not need to be insured by
CMHC or Genworth. Usually the mortgage amount is less than
80% of the house property value.
High-Ratio Mortgage - when
the mortgage for a property is greater than 80% of the
property value, conventional lenders need to have the
mortgage insured against default by CMHC or Genworth.
There is an added cost for this, and it is in the form of
either an increase in the mortgage rate, or a flat fee at
the time of closing.
First Mortgages - this is
the term for a "first" charge against a property. If
there is a default in the mortgage during the term, and
foreclosure proceedings occur, the first mortgage holder is
first in line to receive proceeds from the sale of the
Second mortgages - as the
name would infer, these are mortgages registered in the
second position, after the first mortgage. The rates
are usually higher, and the terms are shorter.
Open Mortgages - this
mortgage allows you to repay the mortgage at any time
Closed Mortgages - these are
mortgages that have fixed monthly payments for a fixed term.
Most lenders will allow you to make an annual lump sum
payment of up to 20% of the principal. If you wish to
pay off the whole mortgage, there is usually a penalty of
either 3 months interest or an interest-rate-differential
Fixed-Term Mortgages - these
are mortgages that have a set term ie 6 months to 10 years,
and the monthly payments are the same each month.
The Adjustable Rate Mortgage
- this instrument is beneficial when interest rates are
decreasing. Your mortgage rate will follow the
fluctuations in the interest market.
Secured Lines of Credit -
also called an LOC, is secured with your property, and
allows you to borrow money, up to an agreed amount, and pay
it down when you have extra cash.
Equity Mortgages - simply a
term reflecting that money can be borrowed using your
property as security. Equity is defined as the
difference between what is owed on the property and the
The 6 Month Convertible
Mortgage - a fixed 6 month instrument, which is advantageous
when rates are falling. You can convert the mortgage
into a fixed long term mortgage anytime during the 6 month
- this refers to the mortgage covering all of the
out-of-pocket expenses incurred during the purchase or
refinancing process. It includes, but not limited to,
closing costs, lawyer, appraisal, broker fees, land
registration fees, property taxes, title insurance, etc.
Bridge Financing - this
financing covers the time "gap" between selling a house and
purchasing a house. If the house you are purchasing
"closes" before the house you sold "closes", this short term
financing covers the time gap.
Reverse mortgage - this CHIP
homeowner income plan allows you to access the equity in
your home as long as you are 55+ and have at least 50%
equity in your property.
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