| Mortgage Info | ||||
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| Mortgage Info |
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This section of our website explains mortgage terminology, how a mortgage works and introduces you to our preferred mortgage specialists. A mortgage is in simple terms, a loan that you take to buy a home. The loan is secured by the property value and your ability to repay the loan. The amount borrowed is called the principal, and the cost of borrowing the money is called interest. The borrower is the mortgagor, and the lender is the mortgagee. When buying a new or previously owned home there are two basic types of mortgage: a Conventional Mortgage and a High Ratio or Insured Mortgage. Conventional Mortgages: Under a conventional mortgage, a lender will normally provide up to 80% of the appraised value or purchase price of a property, whichever is less. You must be able to provide at least 20% of the financing from your own resources. High Ratio or Insured Mortgage: A high ratio mortgage finances a higher percentage - up to 95% - of the appraised value or purchase price of the property, whichever is less. This type of mortgage must, under the national housing act, be insured against nonpayment by the borrower. The insurer typically is the Canada Mortgage and Housing Corporation (CMHC) Mortgage insurance protects the lender against loss if the borrower fails to meet the repayment terms. The application fee $0 and insurance premium (approximately 0.5% to 2.5% of the loan) are paid by the borrower. The higher the ratio of the mortgage to the down payment, the higher the cost of the insurance. Mortgage insurance may be subject to provincial sales tax. |
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