A Glossary of Essential Mortgage Terms
Every industry has its own language and terms. These words and phrases can be confusing to anyone who is not part of the daily operations of a specific industry, and the mortgage business is no exception.
To help you understand the terms, acronyms, and phrases regularly used in the mortgage industry, Mortgages with Nicolle Williams has created this handy reference guide. Here you’ll find valuable information allowing you to comprehend and communicate your mortgage needs effectively.
Appraisal.
An appraisal is a professional inspection of the home to determine the market value of a house.
Borrower/Mortgagor.
The person who receives a mortgage loan.
Lender/Mortgagee.
The person who lends the mortgage funds.
Principal.
The principal is the amount of money that is borrowed for the mortgage, the amount outstanding.
Amortization.
The loan schedule of when a mortgage should be paid off in full.
Down Payment.
Down payment is the portion of the purchase price that you pay at the time of buying. It is usually represented in a percentage.
Closing Costs.
It refers to the costs paid by buyers during the mortgage process. For example, legal fees, surveys, inspections, land transfer taxes, etc.
Equity.
Equity is the difference between the value of the home and the outstanding debt registered against the house.
Loan-to-Value.
The loan-to-value (LTV) ratio helps lenders measure mortgage risk. To calculate this ratio, divide the mortgage amount with the value of the home or property.
Assignment.
It is a type of agreement that allows you to transfer a mortgage from one person to another.
Fixed Rate.
This is the interest rate that is fixed over the term of the mortgage.
Variable Rate.
A variable rate can fluctuate throughout the mortgage term and is based on the bank of Canada’s overnight rate.
Balloon Payment.
A balloon payment is a final lump sum that is paid at the maturity date.
Conventional Loan.
It is a loan that is not insured by any of the mortgage insurers.
First Mortgage.
A first mortgage is a primary lien on the property.
If you’re looking for mortgage agents in Pickering, ON, as well as across Ajax Oshawa, Bowmanville, Whitby, Scarborough, and Toronto, reach out to Mortgages with Nicolle Williams. We offer various mortgage services including mortgage renewals, pre-approval, purchase, refinance, home equity loan, best mortgage rates, first time home buyer mortgages, etc. Our experienced mortgage brokers and agents provide mortgage solutions that are designed for all your mortgage needs.
To learn more about how we can help you, please click here. If you have any questions about obtaining a mortgage, please get in touch with us here.