Conventional Mortgage

Definition

• A property loan that does not exceed 80% of the purchase price and does not require loan insurance.

Synonyms
customary, common mortgage, garden-variety, mainstream, standard

Related Terms and Acronyms

• Alternative Mortgage — Definition, Important,
  • A home loan that is not a standard fixed-rate mortgage.
• Amortization — Definition,
  • Amortization refers to the process of gradually paying down the principal of a loan. Each payment toward the principal reduces your loan by that amount. This is different than an interest-only loan payment where the principal balance is never reduced. Amortization for a mortgage loan in Canada is normally 25 years, but can be as few as 5 years.
• Bank Rate — Definition,
  • Closely related to the overnight rate, the bank rate is the interest rate the Bank of Canada charges to banks and other major financial institutions for one-day loans.
• Canada Mortgage and Housing Corporation (CMHC) — Company Est. 1946, Canada-wide, Very Important,
  • The Canada Mortgage and Housing Corporation: this is a Federally run institution that provides banks and lenders with mortgage insurance. Not to be confused with life or property insurance. In the event of default or foreclosure CMHC assumes responsibility of the property and reimburses the bank/lender the entire mortgage amount. This insurance is required generally when you have less than 25% equity or down payment. This insurance is paid by the property owner in advance but usually added to the mortgage amount. See also "G.E. Capital."
  ➥ Insures Canadian mortgage lenders.
• Down Payment — Definition,
  • The portion of the purchase price a buyer pays, in cash, at the time the loan originates.
• Fixed Rate Mortgage (FRM) — Acronym, Very Important,
  • A loan in which the interest rate and payments remain the same for the entire life of the loan. The interest rate and payment amounts are set at the time of loan origination.
• GE Capital — Company,
  • GE Capital is the new CMHC alternative in the Canadian Mortgage Market place. GE Capital like CMHC provides banks/lenders with mortgage insurance. Not to be confused with life or property insurance. In the event of default or foreclosure GE Capital assumes responsibility of the property and reimburses the bank/lender the entire mortgage amount. This insurance is required generally when you have less than 25% equity or down payment. This insurance is paid by the property owner in advance but usually added to the mortgage amount. See also "CMHC."
  ➥ Also offers commercial financing.
• Lender — Definition,
  • The bank or mortgage company offering the loan.
• Loan-to-Value (LTV) — Acronym, Very Important,
  • The ratio of the principal amount of the loan to the lesser of the purchase price of the property or the property's appraised value. This can be expressed as an 80% loan, or 80% LTV.
  ➥ A widely used term in the mortgage brokerage and lending industry, especially by mortgage underwriters.
• Mortgage (mtg) — Abbreviation, Important,
  • A mortgage is a contract stipulating a specific real property, typically a residence or building, as collateral for a loan. The mortgage incurs a rate of interest that varies according to term and other features.
• Mortgage Application — Definition, Very Important,
  • A document in which a prospective borrower details his or her financial situation to qualify for a loan.
• Mortgage Broker (MB) — Acronym, Important,
  • One who finds clients perspective lenders at generally no cost. Mortgage Brokers have a special relationship with lenders and can offer their clients the best rates and service. CanEquity goes through great lengths to ensure you are serviced by the best Mortgage Brokers in Canada.
• Mortgage Brokerage — Definition, Very Important,
  • An individual or group who brokers deals between their clients and lenders.
  ➥ CanEquity is a mortgage brokerage.
• Mortgage Calculator — Definition, Very Important,
  • A program that calculates the costs involved in a mortgage or determines what kind of mortgage a person can qualify for.
  ➥ CanEquity's mortgage calculator has been rated number one by the Globe and Mail.
• Mortgage Rate — Definition, Very Important,
  • The interest rate on a mortgage loan.
  ➥ You can compare mortgage rates using this website by clicking 'Rates' above.
• Posted Rate — Definition,
  • The mortgage rates initially offered by a bank which a borrower is then expected to negotiate down.
• Prime Lending Rate (PLR) — Acronym, Very Important,
  • The rate of interest charged on loans by chartered banks to their most creditworthy customers.
  ➥ Bank of Canada's prime (best) lending rate.
• Term — Definition,
  • The length of time you commit to repay a lender or bank at an agreed upon interest rate and payment schedule. The interest rate usually remains constant during this term unless the commitment states otherwise. For example, a five year fixed rate mortgage has a term of five years.
• Variable Rate Mortgage (VRM) — Acronym, Very Important,
  • Home loan in which the interest rate is changed periodically based on a standard financial index. Also called an "Adjustable-rate Mortgage."
  ➥ A type of mortgage loan offered by brokers and lenders.