Mortgage Terminology

Hello! Its Josephine Ng, your Mobile Mortgage Specialist with TD Canada Trust. It didn’t occur to me how difficult it can be to make sense of home financing terminology until somebody said to me the other day, what is a HELOC? For those of us who are familiar with mortgage terminology and using acronyms like VIRM, ETO, REFI etc…for others it may be a completely different language! So I wanted to take some time today to go over some mortgage terminology to help you better understand what it all means.

1. VIRM (Variable Interest Rate mortgage) – A mortgage for which the rate of interest may change if other market conditions change. Also referred to as a floating rate mortgage.

2. HELOC (Home Equity line of Credit) – A flexible mortgage alternative using equity available in your home to take advantage of low interest rate with ongoing access to funds.

3. Refinancing – Renegotiating your existing mortgage agreement. This may include increasing the principal or paying out the mortgage in full.

4. Porting – This allows you to move to another property without having to lose your current interest rate. You can keep your existing mortgage balance, term and interest rate plus save money by avoiding early discharge penalties.

5. Open Mortgage – A mortgage that can be pre-paid any time without penalty.

6. Conventional Mortgage – A mortgage that does not exceed 80% of the purchase price of the home. Mortgages that exceed this limit must be insured against default and can also be referred to as high ratio mortgages.

7. Mortgage Term – The number of years or months over which you pay a specified interest rate. Terms can range from 6 months-10 years.

8. Home Equity – The difference between the price for which a home could be sold (market value) and the total debts registered against it.

9. Appraisal – The process of determining the value of property, usually for lending puposes. This value may or may not be the same as the purchase price of the home.

10. Amortization – The amount of time over which the entire debt will be repaid assuming the same interest rate.

Call or email me if you have any questions. And remember, no matter what type of mortgage financing you are looking for, it makes sense to speak to me first. Thank you!

Sincerely,
Josephine Ng
www.tdmortgage.wordpress.com

Source: Mortgage Terminology