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ABC’s of Financing

  • Amortization: Total number of months required to pay the loan and interest in full.
  • Term: The period of the loan during which terms and conditions apply. For example, the interest rate and payment frequency.
  • Initial down payment: The amount payable when purchasing a property. Naturally, this amount must come from your own savings.
  • Conventional loan: Loan from which an initial downpayment of at least 20% is made.
  • Insured loan: Loan from which a downpayment of less than 20% is made. The Bank must insure the loan through a recognized loan insurer such as Genworth Financial Canada, Canada Guaranty, or CMHC.
  • Canada Mortgage and Housing Corporation (CMHC): The national organization responsible for housing and mortgage loan insurance in Canada.
  • Genworth Financial Canada (Genworth): An accredited private mortgage loan insurer.
  • Canada Guaranty: Another accredited Canadian private mortgage loan insurer.
  • Closed term loan: A loan which cannot be repaid until the term expires without paying a penalty to the bank.
  • Open term loan: A loan which can be repaid before the term expires without paying a penalty.
  • Fixed rate: An interest rate applicable to a loan, which stays the same over the course of the term.
  • Variable rate: An interest rate applicable to the loan, which can fluctuate over the course of the term.
  • Capped variable rate: The variable interest rate with a maximum rate that cannot be exceeded.
  • Mortgage line of credit: A line of credit which is secured by a mortgage.
  • Refinancing: The renegotiation of a loan to obtain an additional amount with new terms and conditions.
  • Renewal: The renewal of a mortgage loan at expiry. Includes new terms and conditions (term, interest rate).
  • Alternative Lending: Often known as B Lending. If a client does not qualify for a loan under regular mortgage requirements, a client is is usually referred to this second option.
  • Land Transfer Tax (Welcome Tax): This is a duty collected by every Quebec municipality on the transfer of a new or existing immovable property.