Disclaimer

The calculator provided on this website is intended solely as an estimator and does not reflect an actual mortgage amount or affordability amount. The results generated are for informational purposes only and should not be considered as a precise calculation of what you can afford or the exact terms of a mortgage you may qualify for. For an accurate assessment of your mortgage amount and affordability, we strongly recommend contacting a mortgage professional. They will be able to provide a detailed evaluation based on a complete mortgage application and your specific financial situation.

Mortgage Help for Understanding Mortgage Terms

Navigating the world of mortgages can be daunting, especially with so many terms that might seem like a foreign language. Understanding these terms is crucial for making informed decisions about your home financing. Here’s a guide to help you grasp some of the most common mortgage terms:

1. Amortization
Amortization refers to the process of gradually paying off your mortgage over time through regular payments. These payments cover both the interest and the principal amount, reducing your debt bit by bit until the loan is fully repaid.

2. Appraisal
An appraisal is a professional assessment of a property's market value, typically conducted by a certified appraiser. This is a critical step for both buyers and lenders to ensure the property's value matches the purchase price and the loan amount.

3. Fixed-Rate Mortgage
A fixed-rate mortgage means that your interest rate remains constant for the entire term of the loan. This offers stability and predictability, as your monthly payments will not change, making it easier to budget.

4. Variable-Rate Mortgage
In contrast, a variable-rate mortgage has an interest rate that can fluctuate based on market conditions. This means your payments may increase or decrease over time, which can be beneficial if rates go down, but also risky if rates rise.

5. Mortgage Term
The mortgage term is the length of time you agree to the interest rate and conditions with your lender, typically ranging from six months to ten years. At the end of the term, you'll need to renew or renegotiate your mortgage unless it's paid off.

6. Principal
The principal is the amount of money you originally borrowed from the lender. Your mortgage payments are split between paying off the principal and the interest charged on the loan.

7. Interest Rate
The interest rate is the cost of borrowing the principal amount. It's expressed as a percentage and can be either fixed or variable. The interest rate significantly impacts the total cost of your mortgage over its term.

8. Pre-Approval
A mortgage pre-approval is when a lender evaluates your financial situation to determine the maximum amount they are willing to lend you. This process gives you a clear idea of your budget when shopping for a home and makes you a more attractive buyer to sellers.

9. Equity
Equity represents the portion of your property that you truly own. It's calculated by subtracting your outstanding mortgage balance from the current market value of your home. As you make payments and your property value increases, your equity grows.

10. Closing Costs
Closing costs are the fees and expenses you need to pay when finalising the purchase of a home. These can include legal fees, title insurance, and inspection fees, among others. It's important to budget for these additional costs.

11. Refinancing
Refinancing involves replacing your existing mortgage with a new one, often to take advantage of lower interest rates or to access equity. This can result in lower monthly payments or funds for other financial goals.

12. Portability
Portability is a feature that allows you to transfer your existing mortgage to a new property without incurring penalties. This can be particularly beneficial if you're planning to move before your mortgage term ends.

Understanding these mortgage terms can empower you to make smarter financial decisions and navigate the home buying process with confidence. If you have any questions or need further clarification, don’t hesitate to reach out. Our team is here to help you every step of the way.