What is a Mortgage?

A mortgage is simply a loan secured by real estate. It is more complex than your traditional loan because of the size and legal aspects of real estate ownership. Mortgages commonly involve legal fees, land registrations, title searches, surveys of property and appraisals. This sounds very complicated but PenFinancial Credit Union simplifies the whole procedure and walks you through every step of the process.

Mortgages provide financing for what is usually the largest economic commitment a member faces. Several decisions are involved and our lending staff will usually spend hours with a member before the transaction is completed. Ensuring that the member understands the mortgage and the decisions he is making is very important.

PenFinancial offers First and Second Mortgages and Bridge Financing
Mortgages are normally granted for 75% of the appraised value of the home, thereby requiring a down payment of 25%. We also offer High Ratio Mortgages for those who qualify for Canada Mortgage and Housing Corporation (CMHC) Insurance. These mortgages can finance up to 100% of the appraised value of the home (certain conditions apply). To qualify for a 90% High Ratio Mortgage, the property must qualify according to CMHC regulations.

Terms and Amortization
Mortgages can be repaid for any period up to 25 years. This is called the amortization of the mortgage. The term you select is the interest rate term you select which usually ranges from 6 months to 5 years. The term is the period over which the interest rate and payments are fixed.

Pre-payment
Most mortgages are closed which means that it cannot be paid off before the end of the term without penalty. PenFinancial, however, does allow payments of 15% of the mortgage once a year on the anniversary date of the mortgage. We allow the member the option of increasing their payments by up to 15% annually instead of making the lump sum pre-payment. Taking either of these options can reduce the interest paid over the life of the mortgage and significantly reduce the repayment amortization.

Payment Frequency
Credit Unions, such as PenFinancial, pioneered repayment schedules tailored to members' paydays. We offer weekly, bi-weekly, semi-monthly or monthly mortgage payments. We also accept payroll deductions or automatic transfers for mortgage payments.

If you have any questions about Mortgages and Credit options, please contact us today. We also have Information Booklets available free to our members with more information about Mortgages and Credit.

Additional Resources:
Whether you are looking to buy or rent a home, need some tips on maintaining your home, or information about what's involved when you renovate, the Canada Mortgage & Housing Corporation (CMHC) is a great place to start.