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mortgage 

This post covers standard mortgage types and associated terms. Each bank, credit union and private lender may also offer their own specialized mortgages and terms.

 Brought to you by: Kristen White

 

Term

The period of time your mortgage agreement will be in effect, including your interest rate and terms and conditions. At the end of the term, you either pay off the mortgage in full, renew it or possibly renegotiate your mortgage agreement (for example, decrease your amortization period). Terms are generally for six months to 10 years.

Prepayment Charge / Penalty

Your lender may require you to pay a charge if you want to make a prepayment greater than the amount allowed in your mortgage agreement, or pay off or break a closed mortgage before the end of the term. Sometimes also called a penalty. Prepayment Privilege Terms of your mortgage contract that allow you to pay an amount toward a closed mortgage on top of your regular payments, without triggering a prepayment charge. For example, you may be allowed to make lump-sum payments up to a certain amount or increase the amount of your regular mortgage payments.

Prepayment Penalty

A fee charged to you by the lender for making a prepayment greater than the amount allowed in your mortgage agreement, or for paying off a closed mortgage before the end of the term.

Open Mortgage

A mortgage that can be prepaid at any time during the term, without paying a prepayment charge. The interest rate on an open mortgage may be higher than on a closed mortgage with a similar term.

Closed Mortgage

A mortgage agreement that cannot be changed before the end of the term. Your lender may let you make certain prepayments without paying a charge, but you will usually have to pay a charge to break or change your mortgage agreement.

Cash Back Mortgage

An optional feature that pays you a percentage of your mortgage amount in cash right away. You may have to pay a higher interest rate in order to get a cash back option on your mortgage. It can help you pay for things you’ll need when getting a new home, such as legal fees or moving expenses.

Home Equity Line of Credit (HELOC)

A line of credit secured by your home. You can borrow money up to the credit limit, which is usually a percentage of your home’s value. Fixed Interest Rate Mortgage A mortgage loan where the interest rate and payment amount do not change for a specific term.

Variable Interest Rate Mortgage (Can be Closed or Open Term)

A mortgage with an interest rate that can increase or decrease during the term. The interest rate varies with changes in the market interest rates. The mortgage payments can be fixed, or adjustable (meaning they could change with interest rates), or a combination of both fixed and adjustable payments.

Convertible Rate Mortgage

A mortgage feature that allows you to change your interest rate mortgage to another interest rate mortgage at any time with no penalty.

Standard Charge Mortgage

A type of mortgage that is usually registered for the actual amount of your mortgage loan. If you want to switch your existing mortgage to a different lender at the end of your term, it is generally possible to do so by transferring your mortgage. If you want to borrow additional funds, you will likely need to pay fees to discharge your existing mortgage and register a new one.

Collateral Charge Mortgage

A type of mortgage whose features may include the ability to potentially borrow additional funds, subject to your lender’s approval, without the need to discharge your mortgage, register a new one and pay legal fees. If you want to switch your existing mortgage to a different lender at the end of your term, note that other lenders may not accept the transfer of your mortgage. This means you may need to pay fees to discharge your mortgage and register a new one in order to change lenders.

Self-Employed Mortgage

Can be ideal whether you are a business owner or self-employed. And, if you have a good credit history and have been in business for less than 3 years, you may be able to finance up to 80%of the appraised value of your home when refinancing and 90% of the appraised value of a home you are purchasing. You can receive competitive mortgage rates for: Purchasing a home, Doing a home renovation or home improvements, Consolidating debt and lowering your monthly payments, Financing your other personal needs.

Reverse Mortgage

Unlike an ordinary mortgage, which involves payments by the borrower to the lender, a reverse mortgage involves payments by the lender to the borrower. It is an arrangement whereby homeowners get cash (usually in the form of monthly payments or a lump sum) in return for a mortgage on their home, which is used as security against the loan. This is a strategy sometimes used by retired homeowners who need to supplement their income. A reverse mortgage is one way of tapping into the value of a home.

Do You Have Questions Regarding Your Mortgage? We Are Here To Help, Please Contact Us Anytime With Questions You May Have: 604- 812-3718.

Meet This Month’s Senior Real Estate Consultant for GVC Property Solutions Inc. (GVCPS): Kristen White

Thank you for visiting us. Our job is to provide you with immediate and convenient solutions if you are experiencing difficulty making your mortgage payments each month or experiencing difficulty selling your property without charging you any fees or commissions. Our staff has extensive…
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Feature Video: Housing Market Update November 2017 – British Columbia Real Estate Association