{"id":3123,"date":"2015-10-28T18:28:12","date_gmt":"2015-10-28T22:28:12","guid":{"rendered":"https:\/\/goday.ca\/blog\/?p=3123"},"modified":"2021-09-30T11:09:11","modified_gmt":"2021-09-30T15:09:11","slug":"arbitration-back-end-ratio-collateral-mortgage","status":"publish","type":"post","link":"https:\/\/goday.ca\/blog\/arbitration-back-end-ratio-collateral-mortgage\/","title":{"rendered":"Arbitration, Back-End Ratio &#038; Collateral Mortgage"},"content":{"rendered":"<p style=\"text-align: center;\"><a href=\"https:\/\/goday.ca\/blog\/wp-content\/uploads\/2013\/01\/CSW_01.png\"><img decoding=\"async\" loading=\"lazy\" class=\"aligncenter size-full wp-image-321\" src=\"https:\/\/goday.ca\/blog\/wp-content\/uploads\/2013\/01\/CSW_01.png\" alt=\"GoDay_Common_Cents\" width=\"1206\" height=\"232\" \/><\/a><\/p>\n<p style=\"text-align: center;\"><em>In our re-vamped weekly segment, <a href=\"https:\/\/goday.ca\/blog\/godays-common-cents-wednesday-2\/\">Common Cents Wednesdays<\/a>, we help explain simple-to -complex financial terms. This week, we\u2019re covering \u2018<strong>arbitration\u2019, \u2018back-end ratio\u2019 &amp; \u2018collateral mortgage\u2019<\/strong>. It might sound like a super dry read, but since you\u2019re in the \u201cCafe\u201d grab a Timmies doughnut to sweeten the knowledge.<\/em><br \/>\n<em>We won\u2019t tell.<\/em><\/p>\n<h3>Arbitration<\/h3>\n<p>Arbitration is basically a quicker and generally less expensive means of conflict resolution in which an impartial third party, agreed upon by all sides, makes the end decision, also called the &#8220;award&#8221;. The award is legally binding and it&#8217;s enforceable. Arbitration is generally used when the matter at hand is very technical, if the matter needs a speedy resolution (it&#8217;s faster than litigation) and have a higher tendency to be confidential due to their nature (they&#8217;re often non-public). Arbitration can be either voluntary or mandatory.<\/p>\n<p>A simple example of arbitration: your child breaks something that belongs to your neighbour. Your neighbour needs compensation to repair the damage, but doesn&#8217;t want your child to get into legal trouble. In this case, both you and your neighbour seek an impartial third party to find a reasonable award for the damages.<\/p>\n<h3>Back-End Ratio<\/h3>\n<p>Back-end ratio, in terms of loans, is the <a href=\"https:\/\/goday.ca\/education\" target=\"_blank\" rel=\"noopener\">portion of someone&#8217;s gross income that ends up going towards debt<\/a>, such as car payments and student loans. Lenders will use back-end ratio when determining whether or not to extend or increase credit to the borrower. The lower the borrowers back-end ratio is, the more likely they are to receive a loan. Low back-end ratios are most important when searching for a mortgage.<\/p>\n<h3>Collateral Mortgage<\/h3>\n<p>A home financing tool, a collateral mortgage is a loan backed up by a promissory* note. Basically, with such a mortgage, you have a determined interest rate and term. The difference between a collateral mortgage and a conventional mortgage, however, is that the former registers a charge for up to 100% (with ING bank) or 125% (TD bank) of your home&#8217;s value verses the amount you need to finalize your transaction, as long as you have 20% of your homes equity as a down payment.<\/p>\n<p>The advantage to a collateral mortgage verses a conventional one is that it makes it easier for you to get access to your equity for any desired renovations or property investments. The downside will hit at renewal time. If you <a href=\"https:\/\/goday.ca\/blog\/how-do-i-choose-the-right-bank-for-me\/\">want negotiating power with your bank<\/a>, then a collateral mortgage might not be for you.<\/p>\n<p>Why is this? If your lender doesn&#8217;t offer you a better rate or the feature you&#8217;re looking for at renewal time, it will be costly to transfer to someone else, since you&#8217;ll technically have to start from scratch &#8211; new legal fees and all. With a conventional mortgage, you can transfer to another lender for free.<\/p>\n<h6><em>*Promissory Note: Exactly what the word implies &#8211; it&#8217;s a promise to pay by a fixed date or on demand a sum of money.<\/em><\/h6>\n","protected":false},"excerpt":{"rendered":"<p>In our re-vamped weekly segment, Common Cents Wednesdays, we help explain simple-to -complex financial terms. This week, we\u2019re covering \u2018arbitration\u2019, \u2018back-end ratio\u2019 &amp; \u2018collateral mortgage\u2019. It might sound like a super dry read, but since you\u2019re in the \u201cCafe\u201d grab a Timmies doughnut to sweeten the knowledge. We won\u2019t tell. Arbitration Arbitration is basically a [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[10],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.5 (Yoast SEO v20.5) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\r\n<title>Common Cents Wednesdays: Arbitration, Back-End Ratio<\/title>\r\n<meta name=\"description\" content=\"In our re-vamped weekly segment, Common Cents Wednesdays, we help explain simple-to -complex financial terms. This week, we\u2019re covering \u2018arbitration\u2019, \u2018back-end ratio\u2019 &amp; \u2018collateral mortgage\u2019.\" \/>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/goday.ca\/blog\/arbitration-back-end-ratio-collateral-mortgage\/\" \/>\r\n<meta property=\"og:locale\" content=\"en_US\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"Arbitration, Back-End Ratio &amp; Collateral Mortgage\" \/>\r\n<meta property=\"og:description\" content=\"In our re-vamped weekly segment, Common Cents Wednesdays, we help explain simple-to -complex financial terms. This week, we\u2019re covering \u2018arbitration\u2019, \u2018back-end ratio\u2019 &amp; \u2018collateral mortgage\u2019.\" \/>\r\n<meta property=\"og:url\" content=\"https:\/\/goday.ca\/blog\/arbitration-back-end-ratio-collateral-mortgage\/\" \/>\r\n<meta property=\"og:site_name\" content=\"GoDay Cafe\" \/>\r\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/GoDay.ca\" \/>\r\n<meta property=\"article:published_time\" content=\"2015-10-28T22:28:12+00:00\" \/>\r\n<meta property=\"article:modified_time\" content=\"2021-09-30T15:09:11+00:00\" \/>\r\n<meta property=\"og:image\" content=\"https:\/\/goday.ca\/blog\/wp-content\/uploads\/2013\/01\/CSW_01.png\" \/>\r\n<meta name=\"author\" content=\"GoDay.ca Customer Education Team\" \/>\r\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\r\n<meta name=\"twitter:creator\" content=\"@GODAYca\" \/>\r\n<meta name=\"twitter:site\" content=\"@GODAYca\" \/>\r\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"GoDay.ca Customer Education Team\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\r\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/goday.ca\/blog\/arbitration-back-end-ratio-collateral-mortgage\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/goday.ca\/blog\/arbitration-back-end-ratio-collateral-mortgage\/\"},\"author\":{\"name\":\"GoDay.ca Customer Education Team\",\"@id\":\"https:\/\/goday.ca\/blog\/#\/schema\/person\/5dd4477e7fa335c98b4ab9e4af1a2c3d\"},\"headline\":\"Arbitration, Back-End Ratio &#038; Collateral Mortgage\",\"datePublished\":\"2015-10-28T22:28:12+00:00\",\"dateModified\":\"2021-09-30T15:09:11+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/goday.ca\/blog\/arbitration-back-end-ratio-collateral-mortgage\/\"},\"wordCount\":489,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/goday.ca\/blog\/#organization\"},\"articleSection\":[\"Money\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/goday.ca\/blog\/arbitration-back-end-ratio-collateral-mortgage\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/goday.ca\/blog\/arbitration-back-end-ratio-collateral-mortgage\/\",\"url\":\"https:\/\/goday.ca\/blog\/arbitration-back-end-ratio-collateral-mortgage\/\",\"name\":\"Common Cents Wednesdays: Arbitration, Back-End Ratio\",\"isPartOf\":{\"@id\":\"https:\/\/goday.ca\/blog\/#website\"},\"datePublished\":\"2015-10-28T22:28:12+00:00\",\"dateModified\":\"2021-09-30T15:09:11+00:00\",\"description\":\"In our re-vamped weekly segment, Common Cents Wednesdays, we help explain simple-to -complex financial terms. 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