Overview
To get the best Canadian mortgage rates you must understand the contract that you are entering in with your bank or mortgage providing institution. There are several terms in the mortgage contract that you need to understand to better honor your contract and avoid any future misunderstandings and penalties, understanding the technical terms not only gives you better understanding of what you are getting in to but also provide you an opportunity to save cost by avoiding penalties in the future and choosing the most appropriate mortgage option for yourself. Below we discuss some of the most common technical terms used in the mortgage contracts.
Administration Fee
These fees refer to the amount charged by the mortgage provider to you to evaluate and arrange all the required documents to enter in a valid legal Mortgage contract. This fees also covers the valuation carried out by the mortgage provider to gauge the overall cost of the mortgage. This fees is not usually refundable to you even in event of termination of the contract. Different Mortgage providers charge different rates for the administration services that they provide.
Principle/Capital and Interest
Every mortgages loan has two parts embedded in them, therefore every payment that you make towards your mortgage would have dual effect. One portion would relate to interest while the other portion would relate to the payment made towards deduction of the original or principle loan amount. The amount that you pay would be split as per the contractual rate of interest that you have agreed with your mortgage provider. Those individuals who want to decrease the interest rate that they are charged they should opt for higher down payment or lump sum payments.
Owner’s equity
It refers to the amount of value of the property that you have repaid. It represents the amount of loan that you have repaid in terms of the total value of the property. Higher the equity is lower the amount of interest payment that you would have to make resulting in higher contribution towards your principle. The payment options are discussed at the time of entering in to the mortgage contract and cannot be changed during the term of mortgage.
Intermediary or Agent
It refers to the person who has been responsible for creating contact between you and the mortgage provider. Such individuals act as an agent on part of you and represent your side of bargain when entering in mortgage provider. You must ensure that you employ services of a trusted and experience intermediary who would be able to provide you with the best rates and terms on your Canadian mortgage rates contract. Such intermediaries may also charge a commission or fee for their services. In most cases it is not compulsory to employ an agent. It is your discretion if you want to employ an agent or not.
Mortgagee and Mortgager
The institution or the bank providing the loan or mortgaging services is called the mortgage while the person receiving the loan or mortgage is called a mortgager. A contract refers to the parties with these terms therefore all the clauses relation to you would be titled as mortgager while the company would be referred as mortgager.
