Mortgage Terms

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                                                                                   Mortgage Terms

 

LTV:

The ratio of the mortgage loan amount to the property's appraised value or selling price, whichever is less

 

GDS:

The gross debt service ratio (GDS) refers to the applicant’s shelter costs (mortgage or rent) expressed as a percentage of gross monthly income. For mortgages, this includes principal, interest, and taxes and half of any condominium maintenance fees.

  

TDS:

The total debt service ratio (TDS) refers to the total of all monthly payments expressed as a percentage of gross monthly income. These payments include rent or mortgage (principal, interest, and taxes), personal loan payments, revenue property mortgage payments, credit cards, lines of credit, alimony child support

 

Net Worth:

Net worth (sometimes "net assets") is the total assets minus total liabilities of an individual or company. For a company, also called owner's equity, shareholders' equity, or net assets. Often the process of calculating net worth involves the use of a balance sheet, which is a ledger sheet listing all assets and liabilities with the calculated difference.

 

Certificate of Location or Survey - A document specifying the exact location of the building on the property and describing the type and size of the building including additions, if any.

 

Conventional Mortgage - A mortgage that does not exceed 75% of the purchase price of the home. Mortgages that exceed this limit must be insured against default, and are referred to as high-ratio mortgages (see below).

  

High Ratio Mortgage - If you don't have 25% of the lesser of the purchase price or appraised value of the property, your mortgage must be insured against payment default by a Mortgage Insurer, such as CMHC and Genworth.

  

Fire Insurance - Before a mortgage can be advanced, the purchaser must have arranged fire insurance. A certificate or binder from the insurance company may be required on closing.

  

Mortgage Life Insurance - A form of reducing term insurance recommended for all mortgagors. If you die, have a terminal illness, or suffer an accident, the insurance can pay the balance owing on the mortgage. The intent is to protect survivors from the loss of their homes

  

Closed Mortgage - A mortgage agreement that cannot be prepaid, renegotiated or refinanced before maturity, except according to its terms for more info: www.mortgagebc.biz/openversusclosed

  

Open Mortgage - A mortgage which can be prepaid at any time, without penalty, for more info please go to : www.mortgagebc.biz/openversusclosed

  

Fixed-Rate Mortgage - A mortgage for which the rate of interest is fixed for a specific period of time (the term).For more info please go to : www.mortgagebc.biz/variableversusfixed

 

Variable Rate Mortgage - A mortgage for which the rate of interest may change if other market conditions change. This is sometimes referred to as a floating rate mortgage. For more info please go to : www.mortgagebc.biz/variableversusfixed

RRSP -RRSP to be used as the down payment please go to : www.mortgagebc.biz/rrsp

Porting - This allows you to move your mortgage to another property without having to lose your existing interest rate. You can keep your existing mortgage balance, term and interest rate plus save money by avoiding early discharge penalties.

  

Mortgage Term - The number of years or months over which you pay a specified interest rate. Terms usually range from six months to 10 years.

 

 Mortgagee and Mortgagor - The lender is the mortgagee and the borrower is the mortgagor.

  

Home Equity - The difference between the price for which a home could be sold (market value) and the total debts registered against it.

 

Conditional Offer - An offer to purchase subject to conditions. These conditions may relate to financing, or the sale of an existing home. Usually a time limit in which the specified conditions must be satisfied is stipulated.

 

Firm Offer - An offer to buy the property as outlined in the offer to purchase with no conditions attached.

 

Interim Financing - Short-term financing to help a buyer bridge the gap between the closing date on the purchase of a new home and the closing date on the sale of the current home.

 

P.I.T. - Principal, interest and taxes. Together, these make up the regular payment on a mortgage if you elect to include property taxes in your mortgage payments

 

Convertible Mortgage 

 

 

A short term mortgage usually six or twelve months, allowing the borrower to switch into a longer term at any time without penalty.

 

Roll-Over Mortgage  

 

 

A mortgage loan where the interest rate is established for a specific term. At the end of this term, the mortgage is said to "roll-over" and the borrower and lender may agree to extend the loan. If satisfactory terms cannot be agreed upon, the lender is entitled to be repaid in full. In this case, the borrower may seek alternative financing.

 

Mortgage Loan Insurance (High Ratio)

 

High ratio mortgages must be insured through CMHC (Canada Mortgage and Housing Corporation) or Genworth (G.E. Capital Corporation). These Insurers guarantee the risk of lending to home buyers who need a high ratio mortgage. An insurance premium is paid by the borrower on behalf of the lender. The insurance premium that is paid to CMHC is to protect the lender in the event that the mortgage is not paid. This is not life, disability, or job loss insurance. The insurance premium is calculated as a percentage of the mortgage amount, depending on the loan to value, and may be added to the mortgage amount. To find out about CMHC premiums go to : www.mortgagebc.biz/cmhc and for the Genworth please go to : www.mortgagebc.biz/genworth

 

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