There are two parts to every mortgage payment – the principle and interest. Added upon that may be your Loan Default Insurance (or Loan Insurance) payments, plus a Lender Fee. As well, Creditor Life and Disability Insurance should be bundled in.
Mortgage Payment Terms:
Principal: The total amount owing.
Interest: Percentage owing to the lending institute for borrowing privileges.
Mortgage Loan (or Default) Insurance: Applied to all mortgage holders who are unable to provide at least a 20 per cent down payment.
Lender Fee: For high ratio mortgages that may not be covered by Mortgage Loan Insurance.
Property Taxes: Applied by municipalities, property taxes can be made a part of your regular mortgage payments. As property taxes can be a large yearly expense, often lenders place your property tax portion of your payments in a secondary account in order to remit payment on time and in full. This is a very good way to ensure your taxes are always paid without even thinking about it.
Creditor Insurance: This is a very good type of insurance that ensures families are taken care of should something happen to the borrower. If you don’t already have life insurance this is pivotal.