Basic Mortgage Terms and Information
Loan to Value: the ratio of mortgage amount to lesser of sale price or appraised value.
Conventional Mortgage: A mortgage with a loan to value of 80% or less.
High Ratio Mortgage: A mortgage with a loan to value of greater than 80%.
Mortgage insurance: Provided by either GE capital or CMHC. This is required by Canadian Law on high ratio mortgages to protect the lender against the risk of the property owner defaulting on the mortgage.
Personal Debt Service Ratio: GDS (Gross debt service) The cost of principle, interest, taxes and heat as a ratio of gross family income.
TDS (Total debt service) The cost of all family debts and housing costs (gross debt) as a ratio of gross family income.
Down payment sources: No matter what the source of down payment, the lender will require documentation to confirm the source of down payment for the purchase. Some common sources of down payment are:
- gifts
- Sale of an asset
- Funds on deposit
- Sale of personal property
- Sale of real estate
Self employment or commission sales: will require two years of NOA’s.
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