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| GLOSSARY OF TERMS |
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AMORTIZATION PERIOD:
The actual number of years it will take to pay back your mortgage
loan.
APPRAISED VALUE:
An estimate of the value of the property conducted for the purpose
of mortgage lending by a certified appraiser. This appraisal is
not to be confused with a building inspection.
ASSUMABILITY:
Allows the buyer to take over the seller's mortgage on the property.
CLOSED MORTGAGE:
A mortgage that locks you into a specific payment schedule. A
penalty usually applies if you repay the loan in full before the
end of a closed term.
CONDOMINIUM FEE:
A common payment among owners, which is allocated to pay expenses.
CONVENTIONAL MORTGAGE:
A mortgage loan issued for up to 75% of the property's appraised
value or purchase price, whichever is less.
DOWN PAYMENT:
The buyer's cash payment toward the property. The difference between
the purchase price and the amount of the mortgage loan.
EQUITY:
The difference between the home's selling value and the debts
against it.
HIGH-RATIO MORTGAGE:
A mortgage that exceeds 75% of the home's appraised value. These
mortgages must be insured for payment.
INTEREST RATE:
The value charged by the lender for the use of the lender's money.
Expressed as a percentage.
LAND TRANSFER TAX, DEED TAX OR PROPERTY PURCHASE TAX:
A fee paid to the municipal and/or provincial government for the
transferring of property from seller to buyer.
MATURITY DATE:
The end of the term, at which time you can pay off the mortgage
or renew it.
MORTGAGEE:
The person or the financial institution that lends the money.
MORTGAGE INSURANCE:
Applies to high-ratio mortgages. It protects the lender against
loss if the borrower is unable to repay the mortgage.
MORTGAGE LIFE INSURANCE:
Pays off the mortgage if the borrower dies.
MORTGAGOR:
The borrower.
OPEN MORTGAGE:
Allows partial or full payment of the principal at any time, without
penalty.
PORTABILITY:
A mortgage option that enables borrowers to take their current
mortgage with them to another property, without penalty.
PRE-APPROVED MORTGAGE:
Qualifies you for a mortgage before you start shopping. You know
exactly how much you can spend and are free to make a "firm"
offer when you find the right home.
PREPAYMENT PRIVILEGES:
Voluntary payments in addition to regular mortgage payments.
PRINCIPAL:
The amount borrowed or still owing on a mortgage loan. Interest
is paid on the principal amount.
REFINANCING:
Paying off the existing mortgage and arranging a new one or re-negotiating
the terms and conditions of an existing mortgage.
RENEWAL:
Re-negotiation of a mortgage loan at the end of a term for a new
term.
SECOND MORTGAGE: TERM:
The length of time the interest rate is fixed. It also indicates
when the principal balance becomes due and payable to the lender.
TITLE:
Legal ownership of a property.
VARIABLE-RATE MORTGAGE:
A mortgage with fixed payments but fluctuates with interest rates.
The changing interest rate determines how much of the payment
goes towards the principal.
VENDOR TAKE-BACK MORTGAGE:
When the seller provides some or all of the mortgage financing
in order to sell their property.
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