Amortization period
The actual number of years it will take to pay back your mortgage loan based on a stipulated interest rate and payment schedule. The longer the amortization period the lower the monthly payment. The most common amortization period is 25 years.
Appraisal
The process through which the value of the property is determined for a mortgage or other purpose.
Assumption of Mortgage
Where the purchaser takes over the responsibility for the obligations of the vendor's mortgage as a part of the purchase price.
Closed Mortgage
A mortgage agreement which does not provide for prepayment prior to the term.
Closing Date
The date on which the purchase or sale of the property becomes final and title is transferred.
Conventional Mortgage
A mortgage which does not exceed 75% of the property value.
Condominium Fees (Maintenance Fees)
The proportion of the capital and operating expenses of the Condominium Corporation allocated to each individual unit owner.
Default
Failure to honor your legal obligations as they come due.
Discharge
To remove a mortgage or lien from the title to the property.
Down payment
The purchaser's cash payment towards the property. Usually the difference between the purchase price and the amount of the mortgage loan.
Equity
The difference between the property's value and the debts against it.
Easement
A right acquired by a property owner for access to or over another person's land for a specific purpose.
Encumbrance
A registered claim against a property such as a mortgage.
High-Ratio Mortgage
A mortgage that exceeds 75% of the property's appraised value. Under the National Housing Act these mortgages must be insured against default by the owner.
Interest Rate
The value charged by the lender for the use of the lender's money. Usually expressed as an annual percentage rate.
Maturity Date
The end of the term, at which time you must either pay off the mortgage or renew it for another term.
Mortgage
Security for a loan on property owned.
Mortgagee
The lender who provides the mortgage money.
Mortgagor
The borrower of money who pledges his property as security for the loan.
Open Mortgage
Allows partial or full payment of the principal at any time, without penalty.
Offer to Purchase
A written contract stating the terms under which the purchaser agrees to buy. When accepted by the vendor, it forms a legal contract - an Agreement of Purchase and Sale.
Portable Mortgage
A mortgage feature that enables borrowers to transfer their current mortgage to another property, without penalty or put another way to provide the lender with acceptable replacement security for an existing mortgage loan.
Pre-Approved Mortgage
Qualifies you for a mortgage before you start looking for a home. You know exactly how much you can spend and are free to make a "firm" offer when you find the right property. Note that the lender must still agree to accept the property as security. The lender must be satisfied with the property's value through an independant appraisal.
Prepayment Privileges
Right to make additional payments to your regular mortgage payment.
Principal
The amount borrowed or still owing on a mortgage loan or the component of each monthly payment which goes to reduce the outstanding balance as opposed to interest.
Realty Taxes
Property tax that the purchaser pays yearly to the municipality in which the property is situated for services such as roads, sewers, schools, police, etc.
Refinancing
Re-negotiation of a mortgage loan at the end of a term for a new term, perhaps with a new lender or an increased amount.
Second Mortgage
A mortgage loan granted when there is already one against the property. The second mortgage lender is not in as favourable security rank and may charge a premium for the additional risk.
Term
The period of time for which the parties have agreed on the interest rate and payments and after which the loan must be paid off or renegotiated.
Title
Legal ownership to the property.
Variable-Rate Mortgage
A mortgage with fixed payments, but fluctuating interest rate, usually based on changes to the Prime Rate.
Vendor Take Back Mortgage
When the vendor provides the purchaser with mortgage financing for some or all the mortgage.
by Ryan Carson