Posted by Patrick Moreau on April 3, 2019 in Business
Every mortgage company under sun claims to have the lowest rates. But who really has the lowest rates? It’s hard to tell with all the clever ads and fast talking salespeople, but I will break down how it really works in this quick article: Big banks can get away with charging more because some people will always just feel more comfortable doing business in the bank branch atmosphere.On top of them being aware that they can charge more for this service, they also need to charge more to cover the large infrastructure expenses associated with running a nationwide brick and mortar operation.
Mortgage terms : Term – The period of time you are under contract with a specific lender at the interest rate that they are providing for that time period. Amortization – A term used to describe the period of time over which the entire mortgage is to be paid assuming regular payments. Usually 25 or 30 years. Debt service ratio – The percentage of the borrower’s income used for monthly payments of principal, interest, taxes, heating costs, condo fees (if applicable) and debts. GDS is gross debt service – how much you spend on Principal, Interest, Taxes and Heating. TDS is total debt service – GDS plus all other debt payment obligations. Default – A homeowner is ‘in default’ when he or she breaks the terms of a mortgage agreement, usually by not making required mortgage payments or by not making payments on time. Down payment – The money that you pay up-front for a house. Down payments typically range from 5%-20% of the total value of the home, but can be anything above 5%, if you qualify. Early Discharge Penalty – A penalty you may pay your lending institution for breaking the mortgage contract early. This is usually 3 months interest or the Interest Rate Differential (IRD), whichever is larger. See below for IRD.
Taking care of your financial situation is extremely valuable. Here are some tips related to financial issues. While many credit cards come with the ability to transfer balances, a balance transfer credit card is one that offers a low introductory rate on balance transfers for a certain period of time. If you want to save money on a high-interest rate balance on an existing card, a balance transfer is a good way to go. Balance transfer interest rates vary – some are as low as 0 percent, but these usually have qualifiers such as a minimum of two transactions a month. The lower the promotional rate (and longer the promotional period) the more attractive the card is. However, you’ll often need good credit to qualify.
What Is a Payday Loan? A payday loan is a type of short-term borrowing where a lender will extend high interest credit based on a borrower’s income and credit profile. A payday loan’s principal is typically a portion of a borrower’s next paycheck. These loans charge high interest rates for short-term immediate credit. These loans are also called cash advance loans or check advance loans. More financial calculators at Refinance rates.
Terms: A working capital loan is one taken to finance the everyday operations of a company. Organizations in industries that have high seasonality or cyclical sales cycles often rely on this type of loan to help tide them over during periods of reduced business activity.
Balance transfer: The movement of the amount owing from one account to another account. A credit card balance transfer, for example, involves the movement of the amount owed on one or more credit cards to another account or institution, usually for the purposes of consolidating debt and/or taking advantage of better interest rates and/or payment terms. More financial info on Mortgage loan calculator.
EBITDA: EBITDA stands for Earnings Before Interest, Tax, Depreciation, and Amortization and is calculated by subtracting operating expenses from revenue and adding back depreciation and amortization to operating profit (aka EBIT). EBITDA can be used as a proxy for free cash flow (FCF) because it accounts for the non-cash expenses of depreciation and amortization. On the income statement, EBITDA is a line item above net income that excludes other non-operating expenses, as well as interest expenses and taxes. Some could argue that compared to net income, EBITDA paints a rawer image of profitability. While some proponents of EBITDA argue that it’s a less-complicated look at a company’s financial health, many critics state that it oversimplifies earnings, which can create misleading values and measurements of company profitability.
Interest Rate Differential – A way lenders calculate the penalty for discharging a mortgage before the end of a closed mortgage contract. The difference between the interest that the financial institution will make if you continued your mortgage to the end of the contract and what they will make by loaning it to someone else at the current interest rate. More on Mortgage loan calculator. High ratio mortgage – A mortgage where the borrower is contributing less than 20% of the value of the property as the down payment. The borrower may have to pay a mortgage default insurance premium such as CMHC insurance, usually tacked onto the mortgage amount.