Basic Terms Flashcards
What does GDS stand for? And what factors can help lower it?
Gross Debt Service Ratio
Extending amortization period, or increase income
What does TDS stand for?
What factors can help lower TDS?
Total Debt Service Ratio
Choose a mortgage with a lower interest rate / pay down credit card debt / increase income
What does LTV stand for?
What factors can help lower your LTV?
Loan to Value
Make a large down payment, look at cheaper properties
What is the lowest down payment you can make
5%
What is the max TDS and GDS percentages you can hit
TDS must be under 44% while GDS must be under 39%
What is Bridge Financing?
A short term loan that helps builders or new home buyers who need a quick loan until their other contingencies go through. Since typically bridge loans will have higher interest rates.
What is Subordinated Debt?
Any type of loan that’s paid after all other corporate debts and loan are repaid, in the case of the borrows fault. Borrowers of subordinated debt are usually larger corporations and other business entities
What is a Fixturing period?
The period before the commencement date in the lease, typically mp base rent or additional rent is payable during this period. This gives the tenant control of the space while their tenant improvements are being installed.
What is a high ratio mortgage?
If you don’t have 20% of the lesser of the purchase price or appraised value of the property, your mortgage must be insured against payment default nu a mortgage insurer, such as CMHC
What is the difference between a mortgage term and amortization
A mortgage term is the amount of money during a period that can fluctuate along with it’s interest rates.
While amortization is the calculation of how much time is left to pay off the mortgage and will change based off the terms payments & rates
What are the 5 components of a mortgage payment calculation?
monthly payment amounts, loan amount, mortgage term, interest rate, amortization rate
What is a purchase plus improvements?
It if for home buyers who wish to either do renovations, or flip the property to sell at a higher price.
These kinds of mortgages you can be financed up to 80% of reno costs, but those funds will not be seen until the renos are completed.
What is a draw mortgage?
For either commercial or residential, proof of quotes and plans must be shown to the bank, money will be given out in draw stages as the builder continues to show progress of the build
What happens if a client breaks his/her term before it matures?
He / she will incur an early payout penalty
What is a fixed and variable rate?
Fixed: interest rate will stay the same during the duration of the term
Variable: interest rates will go up or down depending on the economic climate
