 Acceleration
This is an expression that
is usually used when a
person chooses to pay a
mortgage on a weekly or a
bi-weekly basis although it
can apply to any repayment
program. All mortgages are
drawn with a requirement
that you make payments
monthly, however, the bank
will usually agree to
administer the mortgage with
some other payment
frequency. If you choose to
pay bi-weekly and pay one
half of the required monthly
payment each bi-weekly
period, you are paying the
equivalent to one extra
monthly payment per year and
therefore paying off your
mortgage more quickly. If
you choose to pay weekly and
pay one quarter of a monthly
payment each weekly period
you get the same benefit. Be
sure to arrange that your
mortgage payment dates match
your pay days!
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Amortization
The period of time it takes
to pay off your mortgage in
full. Typically you would
choose the longest
amortization available which
is 25 years.
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Appraisal
A process which determines
the market value of
property. This will usually
be performed by a
professional appraiser who
will prepare a comprehensive
report complete with
photographs of the home.
When you deal with Mortgage
Depot®, one copy will be
given to you for your
records.
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Assumable
When a mortgage is
assumable, a buyer may take
over the responsibilities
and benefits of the sellers'
existing mortgage. This may
be advantageous to a buyer
if the interest rate on the
mortgage is below current
market rates. Before
assuming a mortgage,
approval must be obtained
from the lender.
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Blended
Payment
A mortgage payment that
includes both interest and
principal repayment. The
amount of interest taken
from each payment reduces
while the amount applied to
principal reduction
increases over time, but the
payment remains constant.
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Closed
Mortgage
A mortgage may be an open or
closed mortgage. An open
mortgage usually charges a
higher interest rate but may
be paid off at any time
without penalty while a
closed mortgage may not be
paid off during the term
without penalty. Be careful
as some mortgages may not be
paid off even with a penalty
before the maturity date.
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Closing
Costs
Expenses, in addition to the
purchase price of the home,
that are payable on the
completion date. These costs
will include appraisal,
legal and survey costs. Be
sure to talk to your
Mortgage Depot specialist
for a thorough review of
expenses.
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Commitment
letter
Written notification from
the lender to the borrower
that approves the mortgage
request and which should
include the amount of the
mortgage, interest rate,
payment and all terms and
conditions.
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Completion
Date
The date on which your
purchase will complete and
money will change hands
between you and the sellers.
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Conventional
Mortgage
A mortgage loan up to a
maximum of 75% of the
purchase price is referred
to as a conventional
mortgage. Any mortgage in
excess of 75% must be
insured against default.
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Gross
Debt Service Ratio (GDS)
The percentage of your gross
income which you will be
using to pay for the
mortgage payment including
property taxes.
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High
Ratio Mortgage
A mortgage where you have a
downpayment of less than 25%
of the purchase price. This
type of mortgage must be
insured against default.
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Interest
Adjustment Date
The date from when the
lender will start collecting
interest. Your regular
payments will commence one
payment period after this
date. For example, if you
have chosen to make
bi-weekly payments, your
first payment will come due
two weeks after the Interest
Adjustment Date. When you
sign your mortgage papers
the bank will collect from
you an "Interest Adjustment"
which is a calculation of
interest from the Completion
Date to the Interest
Adjustment Date.
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Loan
to Value Ratio
The amount of the mortgage
expressed as a percentage of
the value of the home. For
example, if you wish to
borrow $190,000 on a home
you are buying for $200,000,
the Loan to Value Ratio is
95%.
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Maturity
Date
The last day of the term of
your mortgage agreement. On
the Maturity Date the
mortgage must be paid in
full, renewed with the same
lender or transferred to a
new lender. At Mortgage
Depot® we are constantly
searching the market for the
best terms available for a
free mortgage transfer to
compare with what your
present lender is offering.
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Mortgage
A mortgage is actually a
document which is registered
in Land Titles Office and
provides evidence that you
have given your home as
collateral to a lender to
secure a loan. In practice,
the loan itself is usually
referred to as a mortgage.
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Mortgagee
The lender who provides a
loan secured by a mortgage.
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Mortgagor
A person who takes out a
loan which is secured by a
mortgage.
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Net
Worth
The difference between what
you own (assets) and what
you owe (liabilities) is
called your net worth.
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Portable
A portable mortgage is a
mortgage that can be
transferred from one
property to another. This is
particularly useful if you
sell one home and buy
another.
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Prepayment
Penalty
Unless it is open, the
mortgage may not be paid off
before the Maturity Date
without paying a Prepayment
Penalty. Sometimes the
calculation of the penalty
can be complex and it would
be better to talk to your
Mortgage Depot® specialist
than to attempt to explain
it in great detail here. Be
very careful when
negotiating a mortgage as
some mortgages cannot be
paid off atall before the
Maturity Date.
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Prepayment
Privilege
When you negotiate a closed
mortgage, you are entering
into an agreement with the
lender that you will not pay
off the mortgage during the
term. In return the lender
agrees to maintain the same
interest rate throughout the
term. However, most
mortgages allow certain
prepayment privileges such
as an annual prepayment of a
certain percentage of the
mortgage amount. or an
annual increase in the
mortgage payment. An open
mortgage will usually cost
more but allows you to repay
the mortgage in full or in
part at any time without
penalty.
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Principal
The amount of money actually
borrowed.
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Survey
A certificate showing the
home and other buildings
relative to the property
boundary.
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Frequently
Asked Questions