What is a “High Ratio” Mortgage?
·
A mortgage with a down payment of less
than 20%
What is a “Conventional” Mortgage?
·
A mortgage with a down payment of at
least 20%
What is a “Fixed Term” Mortgage?
·
The Mortgage interest rate and payment
are set for a specific term anywhere from 1 year to 10 years. This mortgage can only be paid prior to the
end of the term by paying a penalty.
What is an “Open Mortgage”?
·
The Mortgage interest rate and payment
are sent for a specific term normally from 6 months to 2 years. These mortgages can be paid out at any time
without penalty.
What is a “Variable Rate”
Mortgage?
·
The Mortgage rate fluctuates with the
prime rate either at the prime rate or at a specified rate above or below
prime.
What is a “Secured Line of
Credit”?
·
Commonly referred to as a Home Equity
Line of Credit or HELOC. It is a revolving line of credit with an interest rate
that floats with the prime rate. The maximum LTV on a HELOC is 65%.
What is “Amortization”?
·
It is the time taken in order to pay
off the mortgage while making your regular payments. Any payments made over and
above your regular payment will reduce the Amortization period. The maximum
amortization in Canada is 25 years for insured mortgages.
What is a "Term"?
What is a “GDS” Ratio?
· This is a shorter period of time within the total amortization period. When you set up your mortgage, you will commit to a set period of time, typically 1-10 years. There is usually a payout penalty if you break the mortgage within the established time frame. As a general rule, the shorter the term is, the lower the rate.
What is a “GDS” Ratio?
·
“GDS” refers to Gross Debt Service. Generally you cannot commit more that 35% of
your gross annual income towards
that payment of principal plus interest plus property taxes and heat (plus 50%
of condominium fees). If your credit score is higher than 680, you may be able
to increase the maximum to 39%.
What is a “TDS” Ratio?
·
“TDS” refers to Total Debt
Service. Generally you cannot commit
more than 42% of gross annual income towards the payments under “GDS” plus
payments on all other debts. This includes credit cards, loans, support
payments, ext. If your credit score is higher than 680, you may be able to
increase that limit to 44%.
What is “LTV”?
·
Loan to Value refers to the size of the
loan in comparison to the value of the property being purchased. The maximum
Loan to Value for a primary residence purchase in Canada is 95%. The maximum refinance LTV is 80%. The maximum for a rental purchase is 80%.
Who is CMHC?
·
Canadian Mortgage and Housing
Corporation (CMHC) provide mortgage default insurance for purchasers with less
than 20% of the purchase price to put down.
Who are Genworth and Canada
Guaranty?
·
Provides the same services as CMHC. The programs are very similar however there are several small differences such as with the self employed and second home programs.
What fees are involved with CMHC,
Genworth or Canada Guaranty?
·
A premium based on a percentage of the
loan. It is generally added into your
mortgage total.
What fees are involved with using
a Mortgage Broker?
·
Mortgage Brokers are paid by the lender
not the borrower on most high ratio and conventional mortgages. Fees are charged only with prior written consent
of the client on non-conventional mortgages.
Any other questions?
Call Christine Buemann – DLC Canadian
Mortgage Experts 250.612.9140
www.christinebuemann.ca
Comments
Post a Comment