Kevin D'Costa

Top Producing Realtor 

Cell: 403-605-5559 |

If you’re a first-time homebuyer, many aspects of the purchase process can be confusing and stressful, including financing. While the mechanics of a mortgage are relatively simple, choosing the right mortgage product can be far from it, as many of the choices available to buyers are obscured by complex and unfamiliar terminology.

To help you cut through the jargon, here’s an alphabetical list of common mortgage terms and their definitions:


Amortization Period

The amount of time it will take to pay off your entire mortgage, usually ranging from 15-25 years (although some lenders offer 30-year amortization periods). A longer amortization period means lower monthly payments, but more interest paid over the duration of the mortgage. Meanwhile, a shorter amortization period will cut down on the amount of interest paid, but monthly payments will be higher.


Closed Mortgage

A mortgage that cannot be fully paid off before the end of the term without penalty. It often comes with strict rules about lump sum payments outside the regular payment schedule. These usually have lower interest rates than open mortgages.


Conventional Mortgage

A mortgage where the loan amount does not exceed 80 per cent of the property’s value (i.e., the down payment is 20 per cent of the purchase price or higher). These mortgages do not require mortgage insurance.


Down Payment

The amount of money a buyer must produce upfront to secure a mortgage. The minimum down payment for a home purchase in Canada is five per cent. A minimum down payment of 20 per cent is required for a conventional mortgage (one that does not require mortgage insurance).


Equity

A property’s market value minus the value of the outstanding mortgage loan on the property. Equity increases as a property’s value rises and the mortgage principal decreases. Once a mortgage is paid off in full, the homeowner has 100 per cent of the equity in their home.


Fixed Rate Mortgage

As the name lets on, this is a mortgage where the interest rate stays constant for the duration of the mortgage term, which generally ranges from six months to 10 years. They are beneficial for the risk averse, as well as anyone who wants their mortgage payments to remain constant. They are also a good option for anyone who thinks interest rates will increase before the end of their mortgage term. A five-year fixed mortgage is the most common mortgage type in Canada, especially among first-time homebuyers.


High-Ratio Mortgage

A mortgage where the loan amount exceeds 80 per cent of the property’s value (i.e., the down payment is less than 20 per cent of the purchase price). This type of mortgage requires mortgage insurance, which is commonly provided by Canada Mortgage and Housing Corp. (CMHC).


Home Equity Line of Credit

A home equity line of credit (HELOC) can serve as the only loan used to finance a home purchase or as a second mortgage. In practice, they function more like a personal line of credit than a traditional mortgage product. However, homeowners must have at least 35 per cent of the equity in their home to receive a HELOC.


Interest

The cost of borrowing money. It is paid to the lender at a previously agreed upon rate on top of the principal mortgage amount.


Interest Rate

The rate at which you pay interest. Lenders generally adjust their interest rates in response to shifts in the Bank of Canada’s overnight rate (https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/).


Maturity Date

The date that your mortgage term ends. When your term ends, you can either repay the remaining balance of your mortgage or renegotiate a new term at current interest rates.


Mortgage Insurance

In Canada, mortgage default insurance is required for all high-ratio mortgages (those with a down payment of less than 20 per cent). Because these mortgages are higher risk than their conventional counterparts, insurance protects the lender if the borrower defaults.


Open Mortgage

A mortgage with no prepayment restrictions. It can be fully paid off at any time without penalty. These tend to have higher interest rates than closed mortgages, but they can be a good choice for homeowners who plan to sell soon.


Portability

A type of mortgage that allows the homeowner to transfer their current mortgage conditions from one home to the next.


Pre-approval

A mortgage pre-approval guarantees a specific loan amount to a buyer before they have even begun looking at homes. Although not necessary, a pre-approval can hasten the purchase process once an offer is submitted and accepted.


Prepayment

When a homeowner pays off their mortgage in full before the maturity date. Many mortgage types levy penalties against homeowners for prepayment – usually, three months of interest or the interest rate differential.


Principal

The full amount of a mortgage loan, not including interest.


Refinancing

Mortgage refinancing involves securing a new loan that is then used to pay off an existing loan. This is often done to switch lenders and secure a lower interest rate. It can also be done as a way of tapping into home equity to pay off higher-interest debt sources, such as credit cards.


Term

The duration of the mortgage agreement between borrower and lender. Mortgage terms generally range from six months to 10 years. During the term, payments remain fixed, while interest rates may or may not follow suit, depending on whether the homeowner has chosen a fixed or variable rate.


Variable Rate Mortgage

A mortgage where the payments remain constant, but the interest rate will change based on market conditions. As a result, when interest rates rise, a larger portion of the payment will be applied to interest. However, when interest rates fall, a larger portion of the payment will be applied to the principal.



- Tyler Difley

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The showing activity across the Province climbed slightly week over week. The showing activity continues to be well above this time period last year, currently sitting at 130.6% more showings compared to last year.
 
The showing activity for CIR's listings also experienced a slight uptick week over week, with 1,995 showings. The majority of the activity remains to be in the mid points of the markets with a slight decline in the lower price points. The showing activity of weeks passed continues to translate into sales as CIR's transactions are up 31.4% in the first two weeks of the month compared to the first two weeks of September 2019.
 
The property ladder has been in full motion over the past three and a half months. With the uptick in the lower price points, it has freed up buyers that had homes they needed to sell to make their next purchase. We have seen the sales volume climb upwards on the price scale as a result.  We do anticipate to see slower activity as we enter into the late Fall, and early Winter months as we do each year but as of right now, the lower inventory combined with heightened sales continues to help balance many markets.
 
-CIR Realty 
 
 
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Calgarians have had more than their share of weather challenges this summer, including several nasty bouts of hail. Thankfully, a little preparation can help your home’s roof emerge unscathed the next time golf-ball-sized ice chunks starts falling from the sky.

“Hail eats standard laminate architectural shingles like sugar eats kids’ teeth,” said Anthony Babin, owner of A.B’s Roofing & Contracting. “The best protection is found in metal, rubber and tile roofs, followed by those with Class 3 or Class 4 high-impact-resistant shingles.”

Of course, protection comes at a cost. While standard shingles will run a homeowner around $2.30 – $3.50 per square foot, depending on the contractor, impact-resistant shingles range from $3.50 – $5.00 per square foot. Rubber, metal and tile come in at $5.00 – $8.00 per square foot.

Fortunately, most roofs are built to last, so that upfront cost can be a solid investment.

“The average lifespan for standard architectural shingles is 15 – 25 years, and the majority come with a limited lifetime warranty,” said Babin. “While warranties for other material like rubber, metal and tile differ among manufacturers, they generally range from 25 – 50 years.”

“HAIL EATS STANDARD LAMINATE ARCHITECTURAL SHINGLES LIKE SUGAR EATS KIDS’ TEETH.” – ANTHONY BABIN, A.B’S ROOFING & CONTRACTING

The choice of material will also impact ease of installation. All asphalt shingles are fairly easy to install, as is rubber, while metal can be more technical.

“With asphalt, you put underlay on and install the shingles right over top, but metal requires a different underlay and strapping on the roof deck,” said Babin “This allows you to elevate the roof and still have the ability for air to transfer through the space, avoiding issues with mould or condensation. Tile roofs can equal metal in terms of complexity, depending on the design.”

Apart from choosing the right roofing material, the key to proper protection during the next hailstorm comes down to general maintenance.

“So many homes are way past due for maintenance, so the biggest thing I stress is being proactive with your property,” said Babin. “We see the most problems with older homes, and often with rental properties where the owner may be trying to squeeze every dollar they can from the property without doing maintenance.”

Homeowners are encouraged to regularly inspect their property and have a roofer or contractor with verified credentials examine their roof if they believe there might be an issue.

“Spring is a good time to look at your roof, as it has just gone through the freeze/thaw cycle that can cause a lot of damage to shingles.”

As with any house-related project, owners should do their homework before hiring a professional.

“Check references on a contractor and ask to see their portfolio, then check that they have general liability insurance and WCB coverage,” said Babin. “At the end of the day, this will ensure that the work is done properly and at a reasonable price.”

-CREB Now

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Data supplied by CREB®’s MLS® System. CREB® is the owner of the copyright in its MLS® System. The Listing data is deemed reliable but is not guaranteed accurate by CREB®.
The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.
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