Oct 16, 2017 
 Sheila Fennell
 Broker
(cell) 416 986 1011

sheila@sellingdurham.ca

RE/MAX First Realty Ltd.,
Brokerage 
Independently owned & operated

 304 Brock St. South, 
 2nd Floor Whitby, Ontario 
 L1N 4K4

 

 Toll Free: (877) 520-3700

 

 Selling Durham
Helping you make the move in Pickering, Ajax, Whitby & Oshawa!

Mortgage Terms

Assumable Mortgage
A type of financing arrangement in which the outstanding mortgage and its terms can be transfered from the current owner to a buyer. By assuming the previous owner's remaining debt, the buyer can avoid having to obtain his or her own mortgage.

Canadian Mortgage and Housing Corporation - CMHC
A division of the Government of Canada that acts as Canada's national housing agency. The CMHC's mandate is to help Canadians access a variety of affordable housing options. It also researches housing and real estate trends in Canada and around the world, providing research to consumers, businesses and other government divisions. The major activity of the CMHC, and the one for which it is best known, is mortgage loan insurance, which insures approved lenders (such as Canada's chartered banks) against borrower default. Mortgage loan insurance provides approved borrowers access to low-cost mortgage rates. CMHC approved buyers may purchase property with as little as 5% down payment.

Collateral
Properties or assets that are offered to secure a loan or other credit. Collateral becomes subject to seizure on default.

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.

Dept To Income Ration
A ratio that indicates what portion of a person's monthly income goes toward paying debts. It is calculated as an individual's total monthly debt, divided by gross monthly income and expressed as a percentage. Total monthly debt includes such expenses as mortgage payments (made up of PITI), credit-card payments, child support and other loan payments. Lenders use this ratio in conjunction with the front-end ratio to approve mortgages.

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.

Front-End Ratio
A ratio that indicates what portion of an individual's income is used to make mortgage payments. It is calculated as an individual's monthly housing expenses, divided by his or her monthly gross income, and then expressed as a percentage. Monthly housing expenses include the mortgage principal, interest, taxes and insurance payments - collectively known as PITI. Monthly gross income is simply annual income divided by 12 (months). Lenders use the front-end ratio in conjunction with the back-end ratio to approve mortgages.

Interest Rate Ceiling
The absolute maximum rate of interest that a financial institution can charge for an adjustable rate mortgage or loan.

Mortgage
A debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses wishing to make large value purchases of real estate without paying the entire value of the purchase up front.

Mortgages are also known as liens against property, or claims on property.

Mortgage Banker
A company, individual or institution that originates, sells and services mortgage loans.

Mortgage Broker
The matchmaker between a homebuyer and a lender whose goal is to originate a mortgage loan. The broker draws from a pool of various lenders to find the right match.

Mortgagee
An entity that lends money to a borrower for the purpose of purchasing a piece of real property. By accepting a mortgage on the real property, the lender creates security in the full repayment of the loan in the future.

Mortgagor
An individual or company who borrows money to purchase a piece of real property. By granting the lender an interest in the property, which allows it to lend the funds with an accurate assessment of risk, the mortgagor provides the lender with a guarantee for the full repayment of the loan. Also known as a "chargor".

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