Meaning of Basic Mortgage Terminology:
When obtaining a mortgage sometimes it is difficult to understand exactly what you are reading because of some terminology that is used to outline your mortgage conditions; I have put together a list of some basic mortgage terms and their meaning; that are used by your lenders.
Mortgage Amount: Is the total Loan you will receive from your lender.
Interest rate: Is the interest in percentage you will pay on you mortgage
• (Fixed rate): is a set percentage rate you will have for the set mortgage term for example 2.5%
• (Variable rate): is a percentage rate with a discount rate from the prime lending rate which is determined by the Bank of Canada. If the prime rate changes so does your mortgage rate at prime minus the discounted rate you received upon your mortgage commitment.
Amortization Period: The number of years it will take to repay the loan.
• Monthly interest payment using semi-annual compounding.
• Accelerated weekly payment option is calculated by taking a monthly payment schedule and assuming only four weeks in a month. We calculate an accelerated weekly payment, by taking your normal monthly payment and dividing it by four.
• Accelerated bi-weekly payment is calculated by dividing your monthly payment by two. You then make 26 bi-weekly payments.
The upside to the accelerated payment options is by the end of a year you have paid the equivalent of one extra monthly payment. This additional amount accelerates your loan payoff by going directly against your loan’s principal. The effect can save you thousands in interest and take years off of your mortgage.
For more information do not hesitate to contact Robert Clancy:
Robert Clancy, AMP,
VERICO Safebridge Mortgage Solutions
SAFEBRIDGE Financial Group
Tel: 416 899-1467
Fax: 1866 385-4049