Mortgage Broker

46 | Consumer Guide 2015 mbabc.ca Amortization The length of time over which a debt is to be repaid; 25 years is the most common term for mortgages, and 30 years is the maximum allowable for insured mortgages in Canada. Conventional mortgage A mortgage loan up to a maximum of 80% of the lending value of the property. Typically, the lending value is the lesser of the purchase price and market value of the property. Mortgage insurance is usually not required for this type of mortgage. Credit bureau A company that collects information from various sources and provides credit information on a person's borrowing and bill paying habits to help lenders assess whether or not to lend money to the person. Credit history or credit report The main report a lender uses to determine your creditworthiness. It includes information about your ability to handle your debt obligations and your current outstanding obligations. Deed A legal document that transfers ownership in the real property to the purchaser. This is often called a "transfer." This document is registered as evidence of ownership. Equity The difference between the price for which a home could be sold and the total debts registered against it. Equity usually increases as the mortgage is reduced through regular payments. Market values and improvements to the property may also affect equity. Gross debt service ratio (GDS) The percentage of the gross income that will be used for payments of principal, interest, taxes and heating costs (P.I.T.H.) and 50% of any condominium maintenance fees or 100% of the annual site lease for leasehold tenure. High-ratio mortgage A mortgage loan higher than 80% of the lending value of the property. This type of mortgage must be insured — by CMHC or a private company, for the benefit of the approved lender, against payment default. Interest The cost of borrowing money. Interest is usually paid to the lender in regular payments along with repayment of the principal (loan amount). Lien A claim against a property for money owing. A lien may be filed by a supplier or a subcontractor who has provided labour or materials but has not been paid. Maturity date The last day of the term of the mortgage. On this day, the mortgage loan must either be paid in full or the agreement renewed. Mortgage life insurance Mortgage life insurance gives coverage for your family, if you die before your mortgage is paid off. Mortgage loan insurance Mortgage loan insurance is required for residential mortgage loans with a loan-to- value ratio of more than 80%, and is available from CMHC or a private company. Because mortgage loan insurance protects the lender against losses in the event that a borrower fails to pay his or her mortgage, it enables more Canadians to purchase their home earlier, at competitive interest rates and benefit from the growth in home equity sooner. Total debt service ratio (TDS) The percentage of gross income that will be used for payments of principal, interest, taxes and heat (P.I.T.H.) and other debt obligations, such as car payments or payments of other loans. —Canada Mortgage and Housing Corp. • Make sure you understand mortgage related words and phrases. Your mortgage broker can provide additional explanation wHAT'S THAT worD?

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