Mortgage Definitions


When the sale of your existing home happens after the purchase of your new home, often bridge financing is needed to extend additional funds for the down payment that you would be receiving from the sale of your current home
bridge financing is essentially a short term loan that ‘bridges’ the gap between your purchase and the sale of your home
bridge financing can only be received if there is a firm offer that has been received on your home. Without that offer, the lender has no security and they cannot provide any bridging
bridge financing is relatively inexpensive and traditionally can be done for up to 30 days, though exceptions can be made for special circumstances

Collateral Mortgages

This is a mortgage that is registered for the full amount of the subject property, as opposed to the loan amount, which is the case for conventional mortgages. There are pros and cons to both types of mortgages. Please contact us for more information.

Down Payment

When purchasing a property, a minimum down payment of 5% down is required.
with a down payment between 5-20% down, you will be required to have mortgage default insurance added to the mortgage. This is arranged by the lender and the premium is added to the mortgage amount – this is called a high-ratio mortgage.
when you have more than 20% down, you avoid any mortgage default fees. This is called a conventional mortgage.
certain types of properties have different down payment requirements. On a single family dwelling, 5% is the minimum while on a rental/investment property, 20% is required.

Interest Adjustment Date and Information

If your IAD and your closing date are not the same date you will be required to pay the interest on your mortgage for the period between your closing date and the IAD. In the example where you took possession on the 27th, assuming a 30 day month, you would be responsible for 3 days of interest on the mortgage amount. Some lenders will deduct this from the original mortgage advance meaning that you will have to make up that shortfall at your lawyers. Some lenders will just deduct this amount directly from your bank account.

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R.D.M. Financial Consultants

FSRA Licence #10716

440 Niagara St, Unit 6A

Welland, Ontario L3C1L5




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