Mortgage FAQs
1. How much will it cost me to get
a mortgage with you?
2. What is the best mortgage to consider?
3. Does the amortization affect the amount
of interest I pay?
4. What does mortgage loan insurance cost?
5. What are GDS and TDS?
6. What is the minimum down payment I can
use? |
How
much will it cost me to get a mortgage with you?
For most residential mortgages I am compensated
by the lending institution, the service is free to the client.
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What
is the best mortgage to consider?
The best way to determine what mortgage
will best suit you is to consult with experienced mortgage specialist.
Short term and variable rate mortgages offer better rates, but longer
terms provide the safety and comfort of a prolonged period of guaranteed
payments. Back to Top |
| Does
the amortization affect the amount of interest I pay?
The amortization has a dramatic
effect on the interest paid on the loan over the length of the mortgage
term. Consider the following example of a $200,000 mortgage at 6.0%:
With a 25 year amortization the monthly payments are
$1,279.61
With a 20 year amortization the monthly payments are
$1,424.38 - a savings in interest compared to 25 years of $42,032.60.
With a 15 year amortization the monthly payments are
$1,679.77 and the savings in interest compared to 25 years is $81,524.82.
Most lender nowadays allow amortization up to 40 years.
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What
does mortgage loan insurance cost?
The mortgage loan insurance premium is calculated as a percentage of the loan
and is based on the size of the down payment in relation to the total purchase
price. Most lenders nowadays allow amortization longer then 25 years. For each
5 years extension, add another .20% to the premium. Business for self applicants
will pay a higher premium than the salaried applicant. |
| |
Loan-to-Value Ratio |
Premium |
Up to and including 80% |
1.00% |
80.01%-85% |
1.75% |
85.01%-90% |
2.00% |
90.01%-95% |
2.75% |
95.01%-100% |
3.10% |
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| Back to Top |
| What
are GDS and TDS?
GDS means Gross Debt Service. The
Gross Debt Service is the maximum percentage of your gross income
allowed to pay the costs of carrying your home. This ratio combines
your principal and interest mortgage payment, property taxes, heating
and condo fees, if applicable. The allowable GDS ratio is 32% for most lenders.
TDS means Total Debt Service. The Total Debt Service is the maximum
percentage of your gross income allowed to pay the costs of carrying
your home, plus other debts. This ratio combines everything from
the GDS as well as any other outstanding debt obligations (i.e.
loans, credit card balances, lines of credit). The allowable TDS
ratio is 40% for most lenders. Back to Top |
| What
is the minimum down payment I can use?
Depends on your income, you may be able
to apply for 100% mortgage. Down payments under 20% of the purchase price
will be subject to mortgage insurance premiums. Back to Top |
