Mortgage Glossary
A
A contract by which one party agrees to sell and another agrees to purchase.
Period of time required to reduce debt to zero when payments are made regularly.
Process by which the mortgage lending value of a property is determined.
B
Interim financing to bridge between the closing date on the purchase of a new home and the closing date on the sale of the current home.
An intermediary between the buyer and seller who is licensed to carry out such activities.
C
The date of which the sale of the property becomes final and the new owner takes possession.
Unlike a standard mortgage, a collateral charge is re-advanceable — that means the lender can lend you more money after closing without you needing to refinance and pay a lawyer. The downside of a collateral charge is that it is non-transferable — It cannot be assigned (switched) to a new lender like a regular mortgage.
A notice from a mortgage lender to a prospective borrower that the lender will advance mortgage funds of a specified amount under certain conditions.
Condition in a contract that calls for the happening of some event or performance of some act before the agreement becomes binding.
An offer to purchase subject to specified conditions. These conditions could be the arranging of a mortgage, or the selling of a present home. Usually a time limit in which the specified conditions must be met is stipulated.
A mortgage loan of up to a maximum of 80% of the lending value of the property for which a lender does not require loan insurance.
D
The percentage of the borrower’s income that will be used for monthly payments.
Non-payment of instalments due under the terms of the mortgage.
Payment of money or other valuables in consideration as a pledge for fulfillment of the contract. A deposit typically makes up a portion of your down payment.
The removal of all mortgages and financial encumbrances of the property, on title.
E
The right acquired for access to or over another person’s land for a specific purpose, such as for driveway or public utilities.
G
Allocate up to a maximum of 35% of your gross annual income towards the repayment of principal and interest towards your mortgage, property taxes, and heating expenses.
H
Loan that exceeds 80% of the property lending value, and which is insured through a mortgage default insurance.
Home equity lines of credit (HELOCs) are essentially revolving lines of credit secured against one’s home. A HELOC is available to a maximum loan to value of 65%.
M
A premium that is added to the mortgage and paid by the borrower (ie. CMHC, Genworth or Canada Guaranty). The mortgage insurance insures the lender against loss in case of default on the part of the borrower.
A form of reducing term insurance available for all mortgagors. In the event of a death of the owner or one of the owners, the insurance pays the balance owing on the mortgage. The intent is to protect survivors from losing their home.
The entity that lends the money.
The entity that borrows the money.
O
A written contract setting forth the terms under which a buyer agrees to purchase a property. Upon acceptance by the seller, it forms a contract, which will form the basis for the final document to be prepared by a lawyer or notary. It includes the legal and/or municipal description (this may consist of lot numbers as well as street address), purchase price, closing date, mortgage and terms of repayment, and list specific items included as part of the sale.
P
Principal, interest and taxes due on a mortgage.
Principal and interest due on a mortgage.
A sum of money paid to a lender for the privilege of prepaying a mortgage in part or in full.
The right of a mortgagee to force the sale of the property without judicial proceedings should default occur.
The right to prepay a specified amount of the principal balance. Penalty interest may be incurred on prepayment options.
Full or partial payment of all or part of the principal, separate from the regular payments called for under a mortgage agreement.
The amount owing to the lender at any time.
R
The return the lender receives for loaning you the money for the mortgage.
Includes real property, leasehold and business whether with or without premises, fixtures, stock in trade, good of chattels in connection with the operation of the business.
S
The accurate mathematical measurement of land and building there on.
T
The actual length of time money is loaned at the contractual rate of interest. Terms range from three months to ten years. Traditionally the longer the term, the higher the rate. At the end of the term you may repay the balance of the loan or re-negotiate at current rates and conditions.
Allocate up to a maximum of 42% of your gross annual salary for all credit payments – including mortgage, car loans, and credit card payments if applicable.
Evidence of ownership registered with the province.
V
Seller of real property.
Z
Municipal laws restricting the use of land for special purposes.