Here are some common mortgage lending terms you should be familiar with:
Amortization Period. The length of time it takes to pay off the entire mortgage. In Canada, the maximum amortization period for an insured mortgage (with a down payment of less than 20%) is 25 years, while the maximum for an uninsured mortgage (with a down payment of 20% or more) is 30 years.
Term. The length of time that the mortgage contract is in effect. At the end of the term, you can either renew the mortgage or pay it off in full.
Interest Rate. The percentage of the loan amount that the lender charges you in interest. This can be a fixed rate, which remains the same over the term of the mortgage, or a variable rate, which changes with the lender's prime rate.
Down Payment. The amount of money you pay upfront towards the purchase of your home. In Canada, the minimum down payment is 5% of the purchase price for homes up to $500,000, and 10% for the portion of the purchase price above $500,000 up to $1 million.
Mortgage Insurance. If your down payment is less than 20% of the purchase price, you will be required to purchase mortgage insurance. This protects the lender in case you default on the loan.
Prepayment Penalty. A fee that you may have to pay if you pay off your mortgage before the end of the term.
Payment Frequency. The frequency at which you make mortgage payments. This can be weekly, biweekly, or monthly.
Closing Costs. Additional costs associated with buying a home, such as legal fees, appraisal fees, and land transfer taxes.
It's important to understand these mortgage lending terms before applying for a mortgage, so you can make informed decisions about your financing options.