Financing is one of the most important part in Buying process and it may have number of definitions you may not be familiar with. Here are some basic terms that will help you to make the right decisions

Mortgage term: It’s  the period of time you choose in which the options you select for your mortgage will be in effect. You can choose a maximum of 10 year term and after that you can renegotiate your mortgage options for your next term.

Amortization period: It is the time you take to pay off the full amount of the mortgage. Its usually 25 years.

Types of interest Rates: Fixed rate- Interest rate does not change for the mortgage term.Variable rate- Interest rate of your mortgage will fluctuate based on the market rates, 

Open Mortgage: You can either pay full mortgage or some part of the mortgage at any time. However, the interest rates are higher in open mortgage.

Closed Mortgage: You can not pay your mortgage early without a penalty,

Conventional: When down payment is 20% or more of the property value. In this case mortgage default insurance premium in not required.

High ratio mortgage: When down payment is less than 20% of the value of property. In this case mortgage default insurance premium is required.

Mortgage loan insurance: Mortgage loan insurance protects lenders in case you are not able to make payments. When your down payment is less than 20% the value of your property, it is a high ratio or high risk mortgage and in that case you will pay mortgage default loan insurance which will be added to your mortgage amount. This allows you to purchase a property with minimum down payment of 5%. Mortgage default insurance is provided by Canada Mortgage and Housing Corporation (CMHC), Sagen, Canada Guaranty Mortgage Insurance Company.


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For inquiries contact:

Alka Shangari
Business Manager-PREP Realty  (403) 589-4630

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