Here
is a
simple
glossary
of
mortgage
terms.
To
help
you
find
the
term
you
are
looking
for
quickly,
simply
click
on the
letter
below.
For
example,
to
find
the
"mortgage",
click
the
letter
"M".
A
Agreement
of
Purchase
and
Sale:
The
legal
contract
a
purchaser
and a
seller
go
into.
We
recommend
that
you
have
your
offer
prepared
by a
professional
realtor
that
has
the
knowledge
and
experience
to
satisfactorily
protect
you
with
the
most
suitable
clauses
and
conditions.
Amortization
Period:
The
number
of
years
it
takes
to
repay
the
entire
amount
of the
financing
based
on a
set of
fixed
payments.
Appraisal:
The
process
of
determining
the
value
of a
property.
Assets:
What
you
own or
can
call
upon.
Often
used
in
determining
net
worth
or in
securing
financing.
Assumption
Agreement:
A
legal
document
signed
by a
buyer
that
requires
the
buyer
assume
responsibility
for
the
obligations
of an
existing
mortgage.
If
someone
assumes
your
mortgage,
make
sure
that
you
get a
release
from
the
mortgage
company
to
ensure
that
you
are no
longer
liable
for
the
debt.
B
Blended
Payments:
Equal
payments
consisting
of
both
an
interest
and a
principal
component.
Typically,
while
the
payment
amount
does
not
change,
the
principal
portion
increases,
while
the
interest
portion
decreases.
C
Canada
Mortgage
and
Housing
Corporation
(CMHC):
CMHC
is a
federal
Crown
corporation
that
administers
the
National
Housing
Act (NHA).
Among
other
services,
they
also
insure
mortgages
for
lenders
that
are
greater
than
75% of
the
purchase
price
or
value
of the
home.
The
cost
of
that
insurance
is
paid
for by
the
borrower
and is
generally
added
to the
mortgage
amount.
These
mortgages
are
often
referred
to as
"Hi-Ratio"
mortgages.
Closed
Mortgage:
A
mortgage
that
cannot
be
prepaid
or
renegotiated.
Closing
Date:
The
date
on
which
the
new
owner
takes
possession
of the
property
and
the
sale
becomes
final.
Conventional
Mortgage:
A
mortgage
up to
75% of
the
purchase
price
or the
value
of the
property.
A
mortgage
exceeding
75% is
referred
to as
a
"Hi-Ratio"
mortgage
and
the
lender
will
require
insurance
for
that
mortgage.
Collateral:
An
asset,
such
as
term
deposit,
Canada
Savings
Bond,
or
automobile,
that
you
offer
as
security
for a
loan.
Credit
Scoring:
A
system
that
assesses
a
borrower
on a
number
of
items,
assigning
points
that
are
used
to
determine
the
borrower's
credit
worthiness.
D
Demand
Loan:
A loan
where
the
balance
must
be
repaid
upon
request.
Deposit:
A sum
of
money
deposited
in
trust
by the
purchaser
on
making
an
offer
to
purchase.
When
the
offer
is
accepted
by the
vendor
(seller),
the
deposit
is
held
in
trust
by the
listing
broker,
lawyer,
or
notary
until
the
closing
of the
sale,
at
which
point
it is
given
to the
vendor.
If a
house
does
not
close
because
of the
purchaser's
failure
to
comply
with
the
terms
set
out in
the
offer,
the
purchaser
forgoes
the
deposit,
and it
is
given
to the
vendor
as
compensation
for
the
breaking
of the
contract
(the
offer).
E
Equity:
The
difference
between
the
market
value
of the
property
and
any
outstanding
mortgages
registered
against
the
property.
This
difference
belongs
to the
owner
of
that
property.
F
First
Mortgage
A debt
registered
against
a
property
that
has
first
call
on
that
property.
Fixed-Rate
Mortgage:
A
mortgage
for
which
the
interest
is set
for
the
term
of the
mortgage.
G
Gross
Debt
Service
(GDS.)
Ratio:
It is
one of
the
mathematical
calculations
used
by
lenders
to
determine
a
borrower's
capacity
to
repay
a
mortgage.
It
takes
into
account
the
mortgage
payments,
property
taxes,
approximate
heating
costs,
and
50% of
any
maintenance
fees,
and
this
sum is
then
divided
by the
gross
income
of the
applicants.
Ratios
up to
32 %
are
acceptable.
Guarantor:
A
person
with
an
established
credit
rating
and
sufficient
earnings
who
guarantees
to
repay
the
loan
for
the
borrower
if the
borrower
does
not.
H
Hi-Ratio
Mortgage:
A
mortgage
that
exceeds
75% of
the
purchase
price
or
appraised
value
of the
property.
This
type
of
mortgage
must
be
insured.
To
avoid
the
cost
of the
insurance,
a 1'st
mortgage
up to
75% is
arranged
and a
2'nd
mortgage
for
the
balance
(up to
90% of
the
purchase
price).
Home
Equity
Line
of
Credit:
A
personal
line
of
credit
secured
against
the
borrower's
property.
Generally,
up to
75% of
the
purchase
price
or
appraised
value
of the
property
is
allowed
to be
borrowed
with
this
product.
I
Interest
Adjustment
Date (IAD):
The
date
on
which
the
mortgage
term
will
begin.
This
date
is
usually
the
first
day of
the
month
following
the
closing.
The
interest
cost
for
those
days
from
the
closing
date
to the
first
of the
month
are
usually
paid
at
closing.
That
is why
it is
always
better
to
close
your
deal
towards
the
end of
the
month.
Interest-Only
Mortgage:
A
mortgage
on
which
only
the
monthly
interest
cost
is
paid
each
month.
The
full
principal
remains
outstanding.
The
payment
is
lower
than
an
amortized
mortgage
since
once
is not
paying
any
principal.
M
Mortgage:
A
mortgage
is a
loan
that
uses a
piece
of
real
estate
as a
security.
Once
that
loan
is
paid-off,
the
lender
provides
a
discharge
for
that
mortgage.
Mortgagee:
The
financial
institution
or
person
(lender)
who is
lending
the
money
using
a
mortgage.
Mortgagor:
The
person
who
borrows
the
money
using
a
mortgage.
O
Open
Mortgage:
A
mortgage
that
can be
repaid
at any
time
during
the
term
without
any
penalty.
For
this
convenience,
the
interest
rate
is
between
0.75-1.00%
higher
than a
closed
mortgage.
A good
option
if you
are
planning
to
sell
your
property
or
pay-off
the
mortgage
entirely.
P
P.I.T.:
Principal,
interest,
and
property
tax
due on
a
mortgage.
If
your
down
payment
is
greater
than
25% of
the
purchase
price
or
appraised
value,
the
lender
will
allow
you to
make
your
own
property
tax
payments.
Portable
Mortgage:
An
existing
mortgage
that
can be
transferred
to a
new
property.
One
would
want
to
port
their
mortgage
in
order
to
avoid
any
penalties,
or if
the
interest
rate
is
much
lower
than
the
current
rates.
Prime:
The
lowest
rate a
financial
institution
charges
its
best
customers.
Prepayment
Penalty:
A fee
charged
a
borrower
by the
lender
when
the
borrower
prepays
all or
part
of a
mortgage
over
and
above
the
amount
agreed
upon.
Although
there
is no
law as
to how
a
lender
can
charge
you
the
penalty,
a
usual
charge
is the
greater
of the
Interest
Rate
Differential
(IRD)
or 3
months
interest.
Principal:
The
original
amount
of a
loan,
before
interest.
R
Rate
Commitment:
The
number
of
days
the
lender
will
guarantee
the
mortgage
rate
on a
mortgage
approval.
This
can
vary
from
lender
to
lender
anywhere
from
30 to
120
days.
Renewal:
When
the
mortgage
term
has
concluded,
your
mortgage
is up
for
renewal.
It is
open
at
this
time
for
prepayment
in
part
or in
full,
then
renew
with
same
lender
or
transfer
to
another
lender
at no
cost
(we
can
arrange).
S
Second
Mortgage:
A debt
registered
against
a
property
that
is
secured
by a
second
charge
on the
property.
Switch:
To
transfer
an
existing
mortgage
from
one
financial
institution
to
another.
We can
have
this
arranged
for
you at
no
cost
to
you.
T
Term:
The
period
of
time
the
financing
agreement
covers.
The
terms
available
are: 6
month,
1,2,3,4,5,6,7,10
year
terms,
and
the
interest
rates
will
be
fixed
for
whatever
term
once
chooses.
Total
Debt
Service
(TDS)
Ratio:
It is
the
other
mathematical
calculations
used
by
lenders
to
determine
a
borrower's
capacity
to
repay
a
mortgage.
It
takes
into
account
the
mortgage
payments,
property
taxes,
approximate
heating
costs,
and
50% of
any
maintenance
fees,
and
any
other
monthly
obligations
(i.e.
personal
loans,
car
payments,
lines
of
credit,
credit
card
debts,
other
mortgages,
etc.),
and
this
sum is
then
divided
by the
gross
income
of the
applicants.
Ratios
up to
40 %
are
acceptable.
V
Variable-Rate
Mortgage:
A
mortgage
for
which
the
interest
rate
fluctuates
based
on
changes
in
prime.
Vendor
Take
Back (VTB)
mortgage:
A
mortgage
provided
by the
vendor
(seller)
to the
buyer.
