Not sure what the terms of your Kelowna fixed mortgage mean? Wondering what the fine print says about your Kelowna low interest mortgage? The following are some helpful definitions:
Amortization
Number of fixed payments or years it takes to repay the entire mortgage loan.
Assumption Agreement
A legal document signed by a home buyer that requires the buyer to assume responsibility for the obligations of a former owner’s mortgage.
Blended Payments
Equal payments consisting of both a principal and an interest component, paid each month during the term of the mortgage. Each month, the principal portion increases while the interest portion decreases, but the total monthly payment does not change.
Closed Mortgage
A mortgage which cannot be prepaid, renegotiated, or refinanced without penalty.
Conventional Mortgage
A mortgage loan which does not exceed 80% of the appraised value or purchase price of the property, whichever is less. Mortgages that exceed this limit must be insured.
Default
Non-payment of instalments due under the terms of a mortgage.
Discharge
Removal of all mortgages and financial encumbrances on a property.
Fixed Mortgage
The mortgage rate does not change for the length of the term chosen.
Foreclosure
A legal procedure whereby the lender obtains ownership of the property following default by the borrower.
Gross Debt Service Ratio
The percentage of gross annual income required to cover payments associated with housing (mortgage principal and interest, property taxes, and heat).
Low Interest Mortgage
Also sometimes referred to as an interest-only mortgage or HELOC (home equity line of credit), this type of mortgage consists of only interest payments (no principal reduction).
Mortgage Insurance Premium
A premium added to the mortgage and paid by the borrower over the life of the mortgage. The mortgage insurance insures the lender against loss in case of default by the borrower.
Mortgage Life Insurance
A form of reducing term insurance recommended for the borrower. In the event of the death of an owner, the insurance pays out the balance of the mortgage. The intent is to protect survivors from losing their home.
Mortgagee
The lender.
Mortgagor
The borrower.
Open Mortgage
A mortgage that can be prepaid at any time without penalty.
P.I. (Principal & Interest)
Principal and interest due on a mortgage.
P.I.T. (Principal, Interest, & Taxes)
Principal, interest and taxes due on a mortgage.
Penalty
A sum of money paid to a lender for the privilege of prepaying a mortgage in part or in full.
Prepayment Option
The right to prepay specified amounts of the principal balance without penalty.
Principal
The amount you owe the lender at any given time.
Rate (interest)
The return the lender receives for loaning you the money for the mortgage.
Refinance Home Loan
A refinance is a new mortgage on your existing property, and a home loan is another name for a mortgage.
Refinance Mortgage
A refinance is a new mortgage on your existing property. Proceeds of the new mortgage can be used for various purposes, such as home renovations, debt consolidations, investment opportunities, etc.
Term
A mortgage “term” is the length of time for which money is loaned at a specified rate of interest. When the term expires, you can either repay the balance of the principal or renegotiate the mortgage at current rates and conditions.
Total Debt Service Ratio
The percentage of gross annual income required to cover payments associated with housing (mortgage principal and interest, property taxes, and heat) and payments on all other debts.
Variable Mortgage
The mortgage rate changes as the Prime rate changes for the length of the term chosen.
