What is mortgage jargons?
Mortgage jargons is the technical terms used by the mortgage industry. They are used to generally described the terms of the loan. With the help of proper jargons, you can provide the accurate information to your customers that help them to understand the loan process effectively.
Some of the mortgage jargons might annoy you when realtors and bankers start throwing terms around, but it’s important to understand what they are saying whether you’re an entrepreneur looking for investors or a person with your own business that is looking to buy or sell property.
The most frequently used jargons in mortgages
1. Amortization Period: This outlines how long it will take to pay off this loan in its entirety and is determined when you secure the mortgage. A longer repayment period like 30 years means that your payments are lower but you’ll end up paying more interest overall over time. The common payoff range is 15 to 25 years.
2. Closed Mortgage: This is a type of mortgage where you are not allowed to pay off the loan before it expires. If you want to pay it off early, refinance, or renegotiate with your lender, then you need to pay a penalty fee. Many lenders will provide accelerated payments but this depends on your specific contract. As opposed to other mortgages, these tend to have lower interest rates.
3. Conventional Mortgage: In the case of a conventional mortgage, that loan covers up to 80% of the purchase price on the property. This means, the buyer has put 20% (or more) down on the property. These mortgages do not require default insurance due to the amount down.
4. Default: Failure to pay your mortgage on time will result in defaulting on the loan.
5. Derogs : Short for ‘derogatory’, derogs refers to an overdue account or late payments on your credit report.
6. Down : Short for down payment. In Canada, the minimum down payment is 5% on any home purchase.
7. Fixed: A fixed-rate mortgage means you are locked in at the interest rate agreed for a longer length of time.
8. Flex Down: A borrowed down payment program would be classified as a type of securitized loan. It allows homeowners to “borrow” money for the down payment by using credit cards, lines of credit, or other loans. By doing this they secure funding that could have been overlooked otherwise.
9. Foreclosure: This refers to the possession of a mortgaged property by the bank or lender if a borrower fails to keep up their mortgage payments.
10. High-Ratio Mortgage: High-ratio mortgages are where one has paid less than a 20% down payment on the purchase price of their house and needs to pay Canada Mortgage & Housing Corporation (CMHC) in order to insure the mortgage.
When you are looking into getting a mortgage, it’s not bad to ask questions if you don’t understand something. The mortgage contract is your signature on paper and it is important to understand any contract you sign. If you need help understanding the terms or conditions of mortgages, contact Concept One Financial Group today who will be happy to answer any questions or clarify anything that may be confusing surrounding mortgage conditions.
How to understand complicated mortgage jargons?
The finance industry is a complicated and unintuitive world, but all the insiders know the meaning of the above jargons, and use them to their advantage in conversations with clients over the phone.
Consult with the team of professionals powered by Dominion Lending Centres, Concept One Financial Group is a team of mortgage professionals work for our customers – not the lenders – to ensure our customers receive the best rates and products available in today’s marketplace. Whether they are looking to purchase their very first homes or upgrade to a new home, mortgage renewal, refinance for equity take out, purchase investment properties.
Our lending solutions are catered for the conventional, self-employed, new immigrant, and non-resident; residential and commercial mortgages; Insurable and uninsured. As is customary in the field of Canadian mortgages, we deal with big banks, smaller lending institutions and private lenders. Each client’s financial needs differ, which is why we work with a variety of lenders.