The stress of house buying

There are many stresses associated with home buying — both financial and emotional.

It doesn't help that the process comes with its own foreign language. While a mortgage broker can help de-mystify these terms, it helps to have a bit of a primer on what some of these terms mean.

After all, it's your money and your home we're talking about as a mortgagor; you have a right to understand what you're reading. (You didn't know you were a mortgagor? Read on.)

We'll start with amortization and term. Both refer to periods of time in the life of your mortgage, and you'll want to be sure that you understand the difference.

The amortization of your mortgage is the length of time that would be required to reduce your mortgage debt to zero, based on regular payments at a specified interest rate.

The amortization period is typically 15, 25 or even 30 years (conventional only), although it can be any number of years or part-years.

You can establish that you are able to make a certain payment each month of say $1,600 for your $300,000 mortgage at 2.49 per cent.

In this case, your amortization period will be just under 20 years.

Or you could tell your broker that you'd like to be mortgage-free in just 10 years. With an amortization period of 10 years at the same interest rate, your $300,000 mortgage will cost you about $2,825 per month.

That's a tougher monthly payment, but you would save thousands of dollars in interest. (More than $38,600 in fact).

As you arrange your mortgage, then, keep in mind that your amortization period may be fairly long.

The shorter you can make it, the less you'll wind up paying for your home in the long term.

The "term" of your mortgage will typically be shorter. The term is the duration of your mortgage agreement, at your agreed interest rate.

This will be a specific length of time, although you will have several choices. A six-month mortgage is a short-term mortgage.

A 10-year mortgage will be one of the longest terms, generally with a higher rate of interest to represent the higher degree of uncertainty in the economic outlook.

After your mortgage term expires, you will need to either pay off the balance of the mortgage principal, or negotiate a new mortgage at whatever rates are available at that time.

Now, back to the term mortgagor. This is one of three very similar terms: mortgagee, mortgagor, and mortgage.

A mortgagee is the lender of the money a bank, company, or individual.

A mortgagor is the borrower: the person or persons (or company) that is borrowing the money, and who will pay it back to the mortgagee.

The mortgage is, of course, the legal document that pledges the property as a security for the debt.

Still confused? Speak with a mortgage professional. Get the best mortgage suited to your needs and all your questions answered in plain talk.

You can call me at 250 862 1806 or email


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About the Author

Tracy Head and Laurie Baird help busy families find mortgage solutions. Together they have more than 45 years of experience in the mortgage industry.

With today’s increasingly complicated mortgage rules, Tracy and Laurie spend time getting to know the people they work with and help them to better understand the mortgage process. They support their clients before, during, and after their mortgage is in place.

Tracy and Laurie work closely with their clients, offering advice and options. With access to more than 40 different lenders, Tracy and Laurie are able to assist with residential, commercial, and reverse mortgages in order to match the needs of their clients with the right mortgage package.

They work closely with their clients to find the right fit, and are around to provide support for years down the road!

Contact them at 250-862-1806 or visit http://www.okanaganmortgages.com

Visit their blog at https://www.okanaganmortgages.com/blog


The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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