Mortgage Calculator

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Mortgage

  A mortgage can also be described as "a borrower giving consideration in the form of a collateral for a benefit (loan)". 

 A mortgage loan or, simply, mortgage (/ˈmɔːrɡɪdʒ/) is used either by purchasers 


of real property to raise funds to buy real estate, or alternatively by existing property owners to raise funds for any purpose, while putting a lien on the property being mortgaged. The loan is "secured" on the borrower's property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property ("foreclosure" or "repossession") to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms.


SECOND MORTGAGE

 A second mortgage is a lien on a property which is subordinate to a more senior mortgage or loan. Called lien holders positioning, the second mortgage falls behind the first mortgage. This means second mortgages are riskier for lenders and thus generally come with a higher interest rate than first mortgages. 


 

REFINANCE

If you know exactly how much money you need, then a refinance could be the option or you. Like the HELOC you only need 20% equity in your home though you can gain access to up to 80% of the value of your home. You also need to have the same credit score of at least 650 in order to qualify with an A-lender.You get one big lump sum payment instead of a revolving line of credit, and you have the option of getting a fixed rate or a variable rate.

The biggest differences begin with the way that interest is calculated. On a HELOC you are only charged interest on what you pull out while a refinance charges you interest on on the entire loan. You are also not necessarily going to go through your existing mortgage lender, you can also go to big banks and prime lenders for your refinance.

There are also fees and penalties involved with the refinance option: prepayment penalties that can equal up to 3 months of interest. The amount you would pay on your loan would include interest and principal. If you think that this is a deterrant, also consider that your monthly payment could be lower in the case of a refinance. This is a good option for those who are taking out money for a large expense such as a child’s education


HELOC- Home Equity line Of Credit

 A home equity line of credit (often called HELOC, pronounced Hee-lock) is a loan in which the lender agrees to lend a maximum amount within an agreed period (called a term), where the collateral is the borrower's equity in his/her house (akin to a second mortgage). Because a home often is a consumer's most valuable asset, many homeowners use home equity credit lines only for major items, such as education, home improvements, or medical bills 


 

The stress test (B-20,) 

Beginning on Jan. 1, 2018, the Office of the Superintendent of Financial Institutions (OSFI) required that those who borrow mortgages from the Canadian banks undergo stress tests to ensure they can make their payments if interest rates rise.

This new stress test, known as B-20, means borrowers have to prove they can afford their mortgage if rates rise by two percentage points, or to the five-year Bank of Canada average rate — whichever one is higher.

The stress test has led to a loss of buying power. While under the old rules, a borrower could get a mortgage at seven times their annual income, under the new rules, that number has been reduced to about five times annual income.


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