Connecting Key People Together Real Estate Investing

Mortgage terminology and Mortgage Terms

Typically from six months to five years, the ‘term’ refers to how long the bank has agreed to lend you the money. At the end of the term, you usually renegotiate a new term.

Amortization: The length of time it will take you to pay off the whole mortgage. Often as long as 25 years, if you don’t accelerate your payments. The longer your amortization, the lower your monthly payments, but the more you pay in interest over time.

Interest rates: Interest is the cost of borrowing money, and the interest rate tells you exactly how much. Using this mortgage calculator, check the difference between borrowing $100 000 at 6% and at 9% at the same amortization. Surprising, no?

That interest rate not only affects how much you pay, it also affects how much you can borrow. So remember to keep searching for the best rate!

What you need to apply for a mortgage

Letter of employment confirmation: Ask your employer for a letter that confirms your position, your pay and how many years you’ve been with the company.

List your assets: Your car, stocks, bonds, GICs. Show which assets will be used for your down payment.

List your liabilities: Car payments, student loans, credit card debt. List all the money you owe, and note how you’re paying it off.

Social Insurance Number: And your chequing account number, and your lawyer’s contact information.

Information about the house you want to buy The home is your security on the mortgage, so the lender wants to know all about it.

Don’t forget these extra costs

• Application fee
• Appraisal fee
• Mortgage broker’s fee
• Land survey fee
• Home inspection fee
• Home Insurance
• Title insurance
• Legal fees
• Adjustments
• Maintenance and utility costs
• Land Transfer Tax
• The GST and new homes