• Overview
• Sellers:
• Pricing Pyramid
• The Effect of Over Pricing
• Activity vs. Timing
• Where Buyers Come From
• Working With a Real Estate Licensee
• Listing Contracts
• Responsibilities of the Seller
• Completing the Sale
• The Process of Selling a Home
• Seller's Checklist
• Fixture or Chattel?
• 20 Tips for Selling Your Home
• Buyers:
• Moving Checklist
• What is a Real Estate Agent?
• Finding a Home that Fits Your Needs
• The Offer to Purchase
• Completing the Purchase
• Typical Expenses
• Nine Mistakes the Buyer Should Avoid
• Options and Choices to Help Customize Your Mortgage
• Glossary
• Mortgage Calculator

Options and Choices to Help Customize Your Mortgage.

MORTGAGE OPTIONS

Assuming an Existing Mortgage: This is where you take over the vendor?s mortgage as part of the price you pay for the house. Assuming an existing mortgage is quick and saves you money on the usual mortgage arrangement fees, such as appraisals and legal fees.

When you assume a mortgage, you don?t have to arrange financing from another lender and the rate on an existing mortgage could be lower than the prevailing market rate.

Vendor Take Back Mortgage (VTB): This means the vendor lends you the money to purchase the home. It is basically a second mortgage.

For example, on a home that costs $150,000, if the vendor has an existing mortgage of $70,000 that you can assume and you have $40,000 for a down payment, the vendor may lend you the outstanding $40,000, which you pay back monthly.

The vendor may be able to offer this loan at less than bank rates. Some vendors will sell this mortgage to a mortgage broker instead of holding it themselves.

Open Mortgage: This means you can repay the loan, in part or in full, at any time without penalty. Interest rates are usually higher on this type of loan.

Closed Mortgage: A closed mortgage usually offers the lowest interest rate available. It is a good choice if you would like to have a fixed rate for a few years.

Types of Mortgages

Conventional Mortgage: This mortgage is for an amount which does not exceed 75% of either the appraised value of the property or the purchase price, whichever is lower. Your down payment is a minimum 25% of the purchase price.

High-Ratio Mortgage: With this type of mortgage, you contribute at least 5% and less than 25% of the cost of the home as a down payment.

A high-ratio mortgage requires mortgage loan insurance. CMHC offers mortgage loan insurance for a premium of between 0.5% and 3.25% of the mortgage amount.

Second Mortgage: This usually has a higher interest rate and shorter amortization than a first mortgage. Secondary financing is often used to make renovations to a home.

Rate of Interest: Interest is the cost of borrowing money and it is paid to the lender. Mortgage interest rates are affected by the prevailing market interest rates. Mortgage rates are either fixed or variable.

Term: The term of a mortgage is the length of time that certain factors, such as the interest rate, are set at a negotiated level.

Amortization: This is the amount of time over which the entire debt will be repaid. Most mortgages are amortized over 15, 20 or 25 year periods. The longer the amortization, the lower your scheduled mortgage payments, but the more total interest you pay.

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• TRG - The Residential Group Realty
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