Introduction To Mortgages

What is a mortgage - how do they really work?

A Mortgage is an interest in property provided by the borrower as security for a loan.

• The borrower (mortgagor) receives funds
• The lender (mortgagee) has an interest in the property until the loan is repaid.

Sources Of Mortgage Funding

• Chartered Banks
• Trust Companies
• Life Insurance Companies
• Credit Unions
• Loan Companies
• Finance Companies
• Mortgage Brokers
• Private Placements
• Vendors (Sellers)

Types Of Mortgages

1. Conventional Mortgages

• Loan cannot exceed 75% of the appraised value of the property

2. High Ratio Mortgages (up to 100% of the appraised value)

• Loan can exceed 75% of the appraised value
• Must be insured if arranged through a bank or trust company (most are insured by Canada Mortgage and Housing, CMHC)

3. NHA Mortgages (Granted under The National Housing Act 1954)

• Lenders are insured against loss by The Canada Mortgage and Housing Corporation

4. Collateral Mortgage

• A loan secured by a Promissory Note and then further secured by means of a mortgage on the property.

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