Mortgages 101

(NC)-Applying for a mortgage is almost like learning another language. With so many financial terms and jargon, it can be difficult to decipher what everything means. Below is a glossary of the most common mortgage terms.

Amortization: The period of time required to pay off your entire mortgage. Amortization periods are usually 15, 20 or 25 years.

Down Payment: What the homebuyer pays up front towards the price of a home before securing a mortgage. Down payments are generally between 5 and 25 per cent of the home's purchase price.

Maturity Date: The last day of your current mortgage term under your mortgage agreement. The agreement must either be renewed on this date or the mortgage paid in full.

Mortgage Payment: A payment that is made at regularly scheduled intervals towards your mortgage debt. The payment includes both principal and interest.

Principal: The amount of money borrowed that you owe the lender.

Mortgage Term: Each mortgage agreement entered into by a homeowner and a lender runs for a certain period of time called the mortgage term. Mortgage terms can vary with typical terms running from 6 months to 10 years. At the end of the term, the agreement must be renewed or renegotiated.

Refinance: The process of taking equity out of your home by increasing your current mortgage balance.

For more information on mortgages and mortgage terminology, visit www.pcfinancial.ca.