What is a mortgage?

Hey, just what is a mortgage anyways?  I know, it sounds such as a silly question, but as a mortgage broker in Saskatoon I have been asked this question countless times.  There’s no shame in asking this question; mortgages are a very complex financial agreement.  Regardless of whether you’re buying your first home in Saskatoon or the fifth there are a very few things you should definitely understand about mortgages.

In the easiest terms, a mortgage is placing up real property (your own home) to secure money in the form of a loan.  The borrower is called the mortgagor, the lender as the mortgagee.  The amount loaned is called the ‘principle’ and the borrower is expected to replay this amount, along with interest, over the repayment period of the loan.  This repayment period of the loan is known as the amortization period.  Because the home is put up as collateral in order to secure income from the lender, if you fail to meet the terms of the mortgage, the lender is legally allowed to sell your own property in order to recoup the income borrowed to purchase it.  This process is called foreclosure - - A process I’m certain we tend to be all very familiar with, or perhaps at least have heard a lot regarding, due to the home owner crisis that has taken place down in the USA.

Obviously as a homeowner, you would want to avoid foreclosure.  So, you need to agree to meet all of the terms of the mortgage agreement.  These terms are outlined in a document within the mortgage called a ‘promissory note’ or simply ‘note’.  This document sets out the terms of the mortgage and through signing it you agree to repay the lender the borrowed amount.  It is important to read and know this document due to the fact any unmet requirement gives the lender the legal right to sell the home in order to recoup funds borrowed.  Not sign a promissory note or mortgage unless you understand all of the terms.

Types of Mortgages

While there tend to be virtually hundreds of different types of mortgages, the ones listed under are the many common as well as are the ones you will probably to be deal with.

- First mortgage
- Open mortgage
- Closed mortgage
- Pre-approved mortgage
- Conventional mortgage
- High-ratio mortgage
- Fixed-term mortgage
- Variable rate mortgage
- Secured lines of credit
- Equity mortgage
- Multiple term mortgage
- The 6 month convertible mortgage
- All-inclusive mortgage
- Bridge financing

This is a little sampling of the types of mortgages you might come across.  If you want to discover more about a particular mortgage just follow its link to detailed information.

If you have any kind of questions about mortgages in Saskatoon please do not hesitate to contact me personally.  I have been a Saskatoon Mortgage Broker for many years and I will gladly answer any kind of questions you may have.

Most of the information here I have learned from my friends at CanEquity

For more information here is an interesting video