Buyer Tips

MORTGAGE TERMINOLOGY


Arranging to pay for your home is one of the most important financial decisions you will ever make in your lifetime.


TERM OF A MORTGAGE
The actual length of time money is loaned at the contractual rate of interest. Terms range from six months to twenty-five years. The longer the term the higher the rate of interest.

OPEN MORTGAGE
Allows borrowers to repay the total amount of their mortgage at any time without penalty. Ideal for those who plan to sell their homes in the near future.

CLOSED MORTGAGE
Usually has the lowest interest rate available. A good choice for those that want security in knowing their monthly payments are fixed for a certain term. Lacks the option of repaying the entire amount of the mortgage upon request.

CONVERTIBLE MORTGAGE
A short term mortgage usually six or twelve months, allowing the borrower to switch into a longer term at any time without penalty.

VARIABLE RATE MORTGAGE
A mortgage where payments can be fixed from one to five years, but the interest rate could change from month to month depending on market conditions. Payments and balance outstanding are adjusted accordingly.

FIRST MORTGAGE
This mortgage is given the first priority at the registry office. It can be conventional or high ratio mortgage. First mortgage can give borrowers the best rate of interest.

SECOND MORTGAGE
A higher interest rate loan that provides borrowers with additional financing if the first mortgage does not meet their total financial requirements.