A B C D E F G H I L M O P R S T V
Abstract of Title (or Certificate of Search) (
UP)
A document setting out instruments registered against the title to the property, e.g. deed, mortgages, etc.
Accelerated Mortgage Payment (
UP)
A mortgage repayment plan in which the borrower selects to make extra payments per year. In case of bi-weekly payment plan, the borrower would make 26 payments instead of the usual 24, and in case of weekly payment plan, the borrower would make 52 payments instead of the usual 48. The extra payments each year have the effect of "accelerating" the repayment of the mortgage.
Accredited Mortgage Professional (AMP) (
UP)
Canada's only national designation for mortgage professionals that sets a single national proficiency standard for Canada's mortgage professionals and is issued by the Canadian Institute of Mortgage Brokers and Lenders (CIMBL).
Accrued Interest (
UP)
The interest charged for the period of time that has elapsed since the last interest date.
Adjustable Rate Mortgage (or Floating Rate Mortgage, or Variable Rate Mortgage) (
UP)
A mortgage for which the rate of interest changes as money market conditions change. While the regular payments you make stay the same for the term, the amount applied toward the principal changes according to the change (if any) in the rate of interest.
Agreement of Purchase and Sale (
UP)
A legal agreement that offers a certain price for a home. The offer may be firm (no conditions attached), or conditional (certain conditions must be fulfilled before the deal can be closed).
AIG United Guaranty (
UP)
A private provider of mortgage default insurance in Canada.
Amending Agreement (
UP)
An agreement between the lender and the borrower by the lender in which the terms of the registered mortgage are changed. The amending agreement may or may not be registered on title.
Amortization Period (
UP)
The period of time over which equal payments would pay off the mortgage in full. Typically, this is 25 years, although amortizations up to 40 years are now available.
Appraisal (
UP)
The process of determining the value of property. This value may or may not be the same as the purchase price of the home.
Appraisal Value (
UP)
An estimate of the market value of the property.
Arrears (
UP)
An overdue payment.
Assumable Mortgage (
UP)
A mortgage that can be taken over ("assumed") by the buyer when a home is sold.
Balloon Payment (
UP)
Any payment of principal over and above the regular payment.
Blanket Mortgage (
UP)
A single mortgage registered against two or more individual parcels of real property.
Blend and Extend (
UP)
A closed mortgage can often be "opened" for the purpose of extending the term. Most lenders will blend the penalty for breaking (usually an
Interest Rate Differential) with the rate for the new extended term.
Blended Payment (
UP)
A mortgage payment combining, or blending, interest and principal components in one constant payment. The principal portion of payment increases, while the interest portion decreases over the term of the mortgage, but the total regular payment usually does not change.
Bridge Financing (
UP)
A loan made for a short term, to "bridge" (or cover) the time gap between completing the purchase of one property and finalizing arrangements to pay for it. The need for this type of financing often results from mismatched closing dates.
Canada Mortgage and Housing Corporation (CMHC) (
UP)
A federal Crown corporation that administers the National Housing Act. CMHC's services include providing housing information and assistance to consumers and providing mortgage default insurance for high ratio mortgages.
Capped Rate Variable Mortgage (
UP)
A variable rate mortgage on which the lender has set a limit to interest rate increases or decreases.
Carrying Costs (
UP)
The expenses of living in and maintaining a home and property. This includes mortgage payments, property taxes, heating, repairs, maintenance fees, etc.
Cash Back (
UP)
A mortgage feature that provides the borrower with cash back, as a percentage of the mortgage principal
Certificate of Charge (or Charge) (
UP)
The name given to a mortgage document when title is registered under the Land Titles System.
Certificate of Location (or Survey) (
UP)
A document specifying the exact location of the building on the property and describing the type and size of the building including additions, if any.
Certificate of Ownership (or Deed) (
UP)
The document signed by the seller transferring ownership of the home to the purchaser. This document is then registered against the title to the property as evidence of the purchaser's ownership of the property.
Certificate of Search (Abstract of Title) (
UP)
A document setting out instruments registered against the title to the property, e.g. deed, mortgages, etc.
Charge (or Certificate of Charge) (
UP)
The name given to a mortgage document when title is registered under the Land Titles System.
Closed Mortgage (
UP)
A mortgage that generally cannot be prepaid, re-negotiated or refinanced before maturity, except according to its terms, which typically includes paying a penalty.
Closing Date (or Completion Date) (
UP)
The date on which the property purchase will complete and money will change hands between the buyer and the seller.
Closing Costs (
UP)
Various expenses associated with purchasing a home. These costs can include, but are not limited to, legal/notary fees and disbursements, property land transfer taxes, as well as adjustments for prepaid property taxes or condominium common expenses, if any.
Commitment Letter (
UP)
A written notification from the lender to the borrower that approves the mortgage request, which includes the amount of the mortgage, interest rate, payment and all terms and conditions. When signed by a borrower, this notification becomes a binding contract.
Compound Interest (
UP)
The interest charged not only on the principal sum but also on interest amounts charged, but not paid, in preceding periods that accumulate as new principal.
Completion Date (or Closing Date) (
UP)
The date on which the property purchase will complete and money will change hands between the buyer and the seller.
Conditional Offer (
UP)
An offer to purchase subject to conditions. These conditions may relate to financing, or the sale of an existing home. Usually a time limit in which the specified conditions must be satisfied is stipulated.
Condo Status Certificate (
UP)
A short report on the current status of a condominium corporation. It provides information on arrears or increases in common expenses, the amount of the reserve fund, any claims against the corporation, and similar.
Conventional Mortgage (
UP)
A mortgage that does not exceed 80% of the purchase price of the home. Mortgage that exceeds this limit must be insured against default, and is referred to as a High Ratio Mortgage.
Convertible Mortgage (
UP)
A mortgage that may be converted to another term at any time.
Debt-Service Ratio (
UP)
The percentage of the borrower's gross income that will be used for monthly payments of principal, interest, taxes, heating costs and condominium fees (if any).
Deed (Certificate of Ownership) (
UP)
Deed (Certificate of Ownership)
Default (
UP)
A failure to make regular mortgage payments as agreed, or to meet certain other terms of a mortgage agreement.
Deposit (
UP)
A sum of money deposited in trust by the purchaser when making an offer to be held in trust by the vendor's agent, broker, lawyer or notary until the closing of the transaction.
Discharge of Mortgage/Charge (
UP)
A legal document executed by the lender, and given to the borrower when a mortgage has been repaid in full, releasing him or her from all obligations and covenants contained in the mortgage.
Disclosure Statement (
UP)
A written statement disclosing information about a specific loan and potential conflicts of interest required under various consumer protection acts.
Down Payment (
UP)
The amount of cash paid towards the purchase transaction by the buyer of a home.
Equity (
UP)
The interest of the owner in a property over and above all claims against the property. This is usually the difference between the market value of the property and any outstanding encumbrances.
Fire Insurance (
UP)
Before a mortgage can be advanced, the purchaser must have arranged fire insurance. A certificate or binder from the insurance company may be required on closing.
Firm Offer (
UP)
An offer to buy the property as outlined in the offer to purchase with no conditions attached.
First Mortgage (
UP)
A mortgage that is registered first against the property. This mortgage has to be paid first in the event of sale or default.
Fixed-Rate Mortgage (
UP)
A mortgage for which the rate of interest is fixed for a specific period of time (the term).
Floating Rate Mortgage (or Adjustable Rate Mortgage, or Variable Rate Mortgage) (
UP)
A mortgage for which the rate of interest changes as money market conditions change. While the regular payments you make stay the same for the term, the amount applied toward the principal changes according to the change (if any) in the rate of interest.
Foreclosure (
UP)
A legal procedure whereby the lender eventually obtains ownership of the property after the borrower has defaulted on payments.
Genworth Financial Canada (
UP)
A private provider of mortgage default insurance in Canada.
Gross Debt Service Ratio (GDS) (
UP)
The percentage of gross (before tax) income required to cover mortgage payments associated with housing costs. Most lenders recommend that the GDS ratio be no more than 32% of gross income.
Guarantor (
UP)
One who promises to pay a debt or perform an obligation contracted by another in the event the original borrower fails to pay or to perform as contracted.
High Ratio Mortgage (
UP)
A mortgage where the down payment is less than 20% of the purchase price. This type of mortgage must be insured against default through Mortgage Default Insurance.
Holdback (
UP)
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.
Inspection (
UP)
The examination of the house by a building inspector selected by the purchaser
Interest (
UP)
An amount, expressed as a percentage, which a borrower agrees to pay on borrowed money, at a certain frequency as per an agreement with the lender.
Interest Adjustment Date (
UP)
The date from which the interest is calculated at the rate and compounded at the frequency set out in the mortgage contract. It is normally the first day of the month following the closing of the mortgage transaction.
Interest Rate (
UP)
The percentage charged on outstanding loan balances.
Interest Rate Differential (IRD) (
UP)
A compensation charge that may apply if you pay off your mortgage principal prior to the maturity date or pay the mortgage principal down beyond the prepayment privilege amount. The IRD amount is calculated on the amount being prepaid using an interest rate equal to the difference between your existing mortgage interest rate and the interest rate that can be charged when re-lending the funds for the remaining term of the mortgage.
Line of Credit (
UP)
A type of credit which offers an individual immediate access to any portion or all of a pre-determined amount of cash upon demand. A line of credit may be either unsecured or secured with personal assets such as bonds, term deposits or equity on a home. A secured line of credit results in lower risk to the financial institution and a lower rate of interest to the individual.
Loan to Value Ratio (
UP)
The amount of the mortgage expressed as a percentage of the value of the home. For example, if the borrowed amount is $90,000 against a home that is valued at $100,000, the Loan to Value Ratio is 90%.
Maturity Date (
UP)
The last day of the term of the mortgage agreement. On the Maturity Date the mortgage must be paid in full, renewed with the same lender or transferred to a new lender.
Mortgage (
UP)
Both a loan used to purchase or refinance a home and a security for the repayment of the loan.
Mortgage Brokers Act (
UP)
A piece of legislation that regulates the activities of mortgage brokers across Canada.
Mortgage Default Insurance (
UP)
A government-backed or privately backed insurance protecting the lender against the borrower's default on a High Ratio Mortgage. Mortgage default insurance is provided to the lender by CMHC, Genworth Financial Canada or AIG United Guaranty and the premium is paid by the borrower.
Mortgage Disability Insurance (
UP)
A form of insurance that pays the mortgage payments in the event the borrower becomes ill or disabled and is unable to work.
Mortgage Life Insurance (
UP)
A form of reducing term insurance that pays off the mortgage in the event of the borrower's death.
Mortgage Term (or Term) (
UP)
The number of years or months over which you pay a specified interest rate. Terms usually range from six months to 10 years.
Mortgage Refinancing (or Refinancing) (
UP)
The replacement of current mortgage financing with new financing, usually to take advantage of different interest rate or financial conditions or the existing equity in the property.
Mortgagee (
UP)
A lender who advances a mortgage to a borrower, where repayment of the loan is secured by a charge on real property.
Mortgagor (
UP)
A borrower who gives title to, or a charge on, real property to a mortgagee to secure repayment of a mortgage loan.
Multiple Listing Service (MLS) (
UP)
A computer-based system for relaying information to real-estate agents about properties for sale.
Open Mortgage (
UP)
A mortgage which can be prepaid at any time prior to maturity, without penalty.
Payment Frequency (
UP)
The choice of making regular mortgage payments every week, every other week, twice a month or monthly.
Portable Mortgage (
UP)
A mortgage that can be transferred from one property to another without having to lose the existing mortgage rate.
Power of Sale (
UP)
A clause generally inserted in mortgages giving the lender the right and power, on default by the borrower, to sell the mortgaged property by public auction, private contract or tender.
Pre-Approved Mortgage (
UP)
A mortgage for a set maximum amount and interest rate that is arranged prior to the purchaser finding a house. Often arranged prior to shopping for a home, this option can help the purchaser establish an affordable price range.
Pre-Authorized Cheques (
UP)
Direct withdrawals of payments due from a borrower's bank account in accordance with authority granted by the borrower.
Prepayment Charge (
UP)
A fee charged by the lender when the borrower prepays all or part of a closed mortgage more quickly than is set out in the mortgage agreement.
Prepayment Option (
UP)
The right set out in the mortgage agreement that allows the borrower to pay a specified amount of the principal balance prior to the maturity date of the mortgage, without incurring additional penalty.
Prime Rate (
UP)
The interest rate at which financial institutions lend to their best customers.
Principal (
UP)
The amount of the loan owed to the lender at any specified time, not including interest.
Private Mortgage (
UP)
A mortgage provided by private corporations and individuals.
Refinancing (or Mortgage Refinancing) (
UP)
The replacement of current mortgage financing with new financing, usually to take advantage of different interest rate or financial conditions or the existing equity in the property.
Renewal (
UP)
The act of renewing the remaining balance of the mortgage at the end of the mortgage term under the new terms and conditions acceptable to both the lender and the borrower.
Rent Roll (
UP)
A statement listing the tenants in occupancy, the area or unit occupied by each, their lease expiry dates and rent payable as well as other leasing details that may be required.
Security (
UP)
Property, or assets, offered as backing for a loan. In the case of mortgages, the property being purchased or refinanced forms the security for the loan.
Second Mortgage (
UP)
A mortgage placed on real property which is already encumbered with one mortgage. Determination of first, second, third mortgage, etc. is determined by priority of registration (time and date).
Secondary Financing (
UP)
Financing real estate with a loan, or loans, subordinate to a first mortgage.
Seller Take-Back Mortgage (or Vendor Take-Back Mortgage) (
UP)
A mortgage in which the vendor uses his or her own equity to provide some or all of the mortgage financing in order to sell the property.
Simple Interest (
UP)
The cost of borrowing money, calculated by applying the interest rate to the original principal amount only. In contrast to compound interest, interest is not charged on interest.
Skip Payment Option (
UP)
A mortgage clause that gives the borrower the ability to skip a regular payment without the mortgage going into default.
Step Mortgage (
UP)
A mortgage product that attaches a mortgage loan to a line of credit in one package.
Subprime Transactions (
UP)
Classification of lending based on the payment risk that the lender faces. Subprime deals (also known as "B" and "C" deals) face a higher risk that the amount of money lent will not be repaid, compared to prime deals (also known as "A" deals).
Survey (or Certificate of Location) (
UP)
A document specifying the exact location of the building on the property and describing the type and size of the building including additions, if any.
Tax Account (
UP)
An account that is created by a lender to hold property taxes collected as part of the mortgage payments on behalf of the homeowner. The lender will then remit the taxes to the municipality from this dedicated account.
Term (or Mortgage Term) (
UP)
The number of years or months over which you pay a specified interest rate. Terms usually range from six months to 10 years.
Title (
UP)
The legal evidence of ownership to a property.
Title Search (
UP)
A detailed examination of the registered title documents to ensure there are no liens or other encumbrances, or claims, on the property, and no question regarding the seller's statement of ownership.
Total Debt Service Ratio (
UP)
The percentage of the borrower's gross income that will be used for monthly payments of principal, interest, taxes, heating and other outstanding loans and debts.
Variable Rate Mortgage (or Adjustable Rate Mortgage, or Floating Rate Mortgage) (
UP)
A mortgage for which the rate of interest changes as money market conditions change. While the regular payments you make stay the same for the term, the amount applied toward the principal changes according to the change (if any) in the rate of interest.
Vendor Take-Back Mortgage (or Seller Take-Back Mortgage) (
UP)
A mortgage in which the vendor uses his or her own equity to provide some or all of the mortgage financing in order to sell the property.
