APR stands for Annual Percentage Rate and is often
used to compare the costs of a mortgage quote with various
lenders. Since lenders use different ways to calculate
the costs of credit, there is no set way you can determine
the cost of a loan.
Capital and Interest Mortgage is when your monthly
loan payments are not only applied against interest
but also against the outstanding principal of the mortgage.
At the end of the term there is no balance.
Cash back is a cash amount, either fixed to a percentage
of a mortgage, which you can choose to accept when you
are closing your mortgage. The lender often has another
way to recoup this cash either through a higher interest
rate or additional fees. This is a common situation
if the house needs work the fund will be used for renovation.
Discounted Rate occurs when the lender reduces the
standard variable rate for a pre-determined length of
time. When this time period ends, the borrower will
pay the standard variable rate.
Early Redemption Charges this is important to understand
prior to signing with a lender. If you were to pay off
the loan before the end of the term, what types of penalties,
if any, would you be responsible? Often, the penalty
is a percent of the principal.
Equity you will likely here this phrase a great deal
as you secure the purchase of a home. In banking terms,
equity is the difference between owning a property and
the money owned on a property.
Lock-in Period during this time your rate of interest
is fixed so it cannot rise above this rate until you
have settled your mortgage and taken possession of the
property. This is more helpful with fixed mortgages
than variable rate mortgages, which tend to quickly
Mortgage Indemnity Guarantee (MIG) is a type of insurance
which protects the lender in the case of a high-ratio
mortgage if you were to default on the mortgage at a
time when the value of your home is less than the amount
you would have borrowed.
Negative Equity occurs when the value home is less
than the amount owed on your mortgage. This usually
takes place when you have taken out a large loan on
a house and the prices fall substantially.
Settlement is the date on which the title to the real
estate legally transfers from the seller to the buyer.
The loan usually begins on this date at well. It is
important to note that numerous additional expenses
and fees are charged at the time of settlement.
Structural Survey this is a comprehensive report on
the condition of the property you are looking into buying.
The inspector will look at the inside and outside of
the property and tell you if it is structurally sound.