A Acceleration
The act or phenomenon of applying a system or strategy that reduces or eliminates the principle balance of a mortgage loan more quickly than allowed by the loan’s natural amortization schedule. In simple terms paying off your loan faster than normal. This is an expression that is usually used when a person chooses to pay a mortgage on a weekly or a bi-weekly basis although it can apply to any repayment program. All mortgages are drawn with a requirement that you make payments monthly; however, you have an option with most of the institutional lenders to pay biweekly or weekly this will result into one extra monthly. For you convenience you can you can arrange to pay the mortgage payments on your pay days.
Agreement of Purchase and Sale
A contract by which one party agrees to sell and another agrees to purchase. This agreement may be firm (no conditions attached) or conditional (certain conditions must be fulfilled before the deal can be closed).
Amortization
The gradual retirement of a debt by means of partial payments of the principal at regular intervals in other words the period of time it takes to pay off your mortgage in full. Typically you can choose the amortization period up to 35 Years.
Appraisal
A process for estimating the market value of a particular property. It can help the purchaser determine what price to offer. It can also be used by the lender for mortgage purposes. The appraised value seldom matches the actual purchase price exactly as other factors influence price.
Assumable
A mortgage held on a property by the seller that can be taken over by the buyer, who then accepts responsibility for making the mortgage payments. This may be advantageous to a buyer if the interest rate on the mortgage is below the current market rates. Before assuming a mortgage in certain cases the approval must be obtained from the lender.
B
Blanket Mortgage
A mortgage covering at least two pieces of real estate as security for the same mortgage.
Blended Payment
A mortgage payment that includes principal and interest. It is paid regularly during the term of the mortgage. The payment total remains the same, although the principal portion increases over time and the interest portion decreases.
C
Canada Mortgage and Housing Corporation (CMHC)
Canada Mortgage and Housing Corporation, A Crown corporation that administers the National Housing Act for the federal government and encourages the improvement of housing and living conditions for all Canadians. CMHC also creates and sells mortgage loan insurance products.
Certificate of Location or Survey
A document that illustrates the property boundaries and measurements, specifies the location of buildings on the property, and indicates any easements or encroachments.
Certificate of Search or Abstract of Title
A summary of all conveyances, such as deeds or wills and legal proceedings, giving the names of the parties, the description of the land, and the agreements, arranged to show the continuity of ownership..
Closed Mortgage
A mortgage agreement which does not provide for prepayment prior to maturity. A lender may permit prepayment under certain circumstances but will levy a prepayment charge for doing so.
Closing Costs
All of the costs to the buyer and seller individually that are associated with the purchase, sale or financing of real property on completion date
CMHC or Genworth Insurance Premium
Mortgage insurance insures the lender against loss in case of default by the borrower. Mortgage insurance is provided to the lender by CMHC or GEMICO and the premium is paid by the borrower.
Commitment Letter
Written notification from the mortgage lender to the borrower that approves the advancement of a specified amount of mortgage loan which includes mortgage amount, interest rate payment and other terms and conditions
Completion Date
This is the date when the purchase becomes final and the Purchase Price is paid by the buyer’s conveyancer and received by the seller’s conveyancer. The seller must move out of the property on this date. The keys are released to the buyer and they may move into the property.
Conditional Offer
An Offer to Purchase that is subject to specified conditions, for example, the arranging of a mortgage. There is usually a stipulated time limit within which the specified conditions must be met.
Conventional Mortgage
A mortgage loan up to a maximum of 80% of the lending value of the property. Mortgage loan insurance is not required for this type of mortgage
D Deed (Certificate of Ownership)
A legal document which is signed by both the seller and the purchaser, transferring ownership. This document is then registered against the title to the property as evidence of the purchaser's ownership of the property
Deposit
Money placed in trust by the purchaser when an Offer to Purchase is made. The sum is held by the real estate Broker or lawyer or the seller until the sale is closed, and then paid to the Seller.
E
Equity
The home owner's interest in a property; the difference between fair market value and the total debts registered against it.
F Firm Offer
An offer to buy the property as outlined in the offer to purchase with no conditions attached.
Fixed-Rate Mortgage
A mortgage for which the rate of interest is fixed for a specific period of time (the term).
Foreclosure
A legal procedure in which the lender gets ownership of the property if the borrower defaults on the mortgage loan.
G
Gross Debt Service Ratio (GDS)
The percentage of the borrower's gross monthly income that will be used for monthly payments of principal, interest, taxes, heating costs and half of any condominium maintenance fees. See also Total Debt Service Ratio (TDS)
H High Ratio Mortgage
A mortgage where you have a down payment of less that 20% of the purchase price. This type of mortgage must be insured against payment default. See also Conventional Mortgages.
Holdback
An amount of money required to be withheld by the lender during the construction or renovation of a house to ensure that construction is satisfactorily completed at every stage.
An amount of money withheld by the lender during the progress of construction or renovation of a house to ensure that construction is satisfactory at every stage. A standard holdback amount is 10% of the total cost of the building project.
I
Inspection
The examination of the house by a building inspector selected by the purchaser or the seller.
Interest
The cost of borrowing money, interest is usually paid to the lender in installments along with repayment of the principal loan amount.
Interest Adjustment Date
The date that the lender will start collecting interest. Your regular payments will commence one payment period after this date. For example, if you have chosen to make bi-weekly payments, your first payment will come due two weeks after the Interest Adjustment Date. When you sign your mortgage papers the bank will collect from you an "Interest Adjustment" which is a calculation of interest from the Completion Date to the Adjustment Date.
Interim Financing
Short-term financing needed to help a buyer bridge the gap between the closing date on the purchase of a new home and the closing date on the sale of the current home.
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L
Liabilities
What you owe.
Loan to Value Ratio
The amount of the mortgage expressed as a percentage of the value of the home. For example, if you wish to borrow $90,000 on a home you are buying for $100,000, the Loan to Value Ratio is 90%.
M Maturity Date
The last day of the term of the mortgage agreement. On this day the mortgage loan must be either paid in full or the agreement renewed or transferred to the lender.
Mortgage
A mortgage is security for a loan on the property that you own. It is your personal guarantee to repay the loan as well as a pledge of the property as security for the loan.
Mortgage and Life Insurance .
This insurance guarantees that if you die your mortgage will be paid in full. This insurance can be conveniently purchased through your financial institution. However, you may want to compare rates for equivalent products from an insurance broker.
Mortgage Term
The number of years or months over which you pay a specified interest rate. Terms usually range from six months to 10 years.
Mortgagee
The lender who provides a loan secured by a mortgage.
Mortgagor
The borrower who pledges the property as security for the loan.
N
Net Worth
The difference between what you own (assets) and what you owe (liabilities) is called your net worth.
Net Worth
O Open Mortgage
A mortgage which can be prepaid at any time, without penalty.
P
P.I.T.
Principal, interest and taxes --payments due on a regular basis under the terms of the mortgage agreement.
Generally, payments are made monthly and include one-twelfth of the estimated annual municipal and school taxes. Since these taxes change from year to year, this section of the mortgage will change accordingly
Power of Sale
A clause in a mortgage documents hat permits the mortgagee to sell the property which secures the mortgage loan in the event that mortgage payments are not made in a timely manner.
Portable
A portable mortgage is a mortgage that can be transferred from one property to another. This is particularly useful if you sell one home and buy another.
Porting
This allows you to move to another property without having to lose your existing interest rate. You can keep your existing mortgage balance, term and interest rate plus save money by avoiding early discharge penalties.
Pre-approved Mortgage
This product offers you the security of knowing how much mortgage financing is available and protect your rate for up to 60 to 90 days depending on the lender.
Prepayment Option
A clause in a mortgage agreement which specifies when and how prepayments may be made.
Prepayment Penalty
Unless it is open, the mortgage may not be paid off before the Maturity Date without paying a Prepayment Penalty. Be very careful when negotiating a mortgage as some mortgages cannot be paid off at all before the Maturity Date. See also Closed Mortgages and Maturity Date.
Prepayment Privilege
When you negotiate a closed mortgage, you are entering into an agreement with the lender that you will not pay off the mortgage during the term. In return, the lender agrees to maintain the same interest rate throughout the term but in case of Variable rate mortgage the interest rate changes as the prime rate changes. However, most mortgages allow certain prepayment privileges such as an annual prepayment of a certain percentage of the mortgage amount or an annual increase in the mortgage amount. An open mortgage will usually cost more but allows you to repay the mortgage in full or in part at any time without penalty.
Principal
The original balance of money loaned, excluding interest. The remaining Balance of the loan excluding interest also called principal.
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R
Refinancing
To pay off a mortgage or other registered encumbrance and arrange for a new mortgage, sometimes with a different financial institution.
Renewal
On expiry of the mortgage term, the mortgage may "roll over" on new terms and conditions acceptable to both the lender and the borrower. This is known as renewing a mortgage. Otherwise, the lender is entitled to be repaid in full and the borrower may seek alternative financing.
S
Second Mortgage
An additional mortgage on a property that already has a mortgage.
Security
In the case of mortgages, real estate offered as collateral for the loan.
Survey
A document that illustrates the property boundaries and measurements, specifies the location of buildings on the property, and indicates any easements or encroachments.
T
Term
The length of time which a mortgage agreement covers. Payments made may not fully repay the outstanding principal by the end of the term because the amortization period is longer.
Title
A freehold title gives the holder full and exclusive ownership of land and buildings for an indefinite period of time.
In condominium ownership, land and common elements of buildings are owned collectively by all unit owners, while the residential units belong exclusively to the individual owners.
A leasehold title gives the holder a right to use and occupy land and buildings for a defined period of time.
Total Debt Service Ratio
The percentage of your gross income which you will be using to pay for the mortgage payment including property taxes and all other debt payment such as credit cards and bank loans. See also Gross Debt Service Ratio (GDS).
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V
Variable Rate Mortgage
A mortgage for which the rate of interest may change if other market conditions change. This is sometimes referred to as a floating rate mortgage.
Vendor Take Back Mortgage
Mortgage financing arranged between the seller of the property and the buyer. The title is transferred to the buyer.
Often this type of loan is a second mortgage which the seller is willing to arrange at below market rates to ensure the buyer can purchase the house. Most of these arrangements are not renewable or transferable to the next owner of the house.
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X
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Y
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Z
Zoning Bylaws
Municipal or regional laws that specify or restrict land use.
