Glossary of Terms
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, or comparative market analysis.
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:
The owner has title to a single unit, as well as a share in the common elements such as elevators or surrounding land.
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 financial institution that lends the money.
MORTGAGOR:
The borrower.
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.
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.
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.
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 in 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. |