ViaFinancial Mortgage Dictionary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

• Abandonment of Property
  To vacate a property with a definite intention never to return.
  
  
• Abstract of Title
  Registry System: A condensed history of the title to a parcel of land. The abstract consists of a synopsis of every recorded instrument affecting the title to that land arranged in chronological order of recording.
  
  
• Accelerated Weekly Payment
  A mortgage repayment plan in which the borrower makes 52 payments per year instead of 48 which would be required if the payment plan called for four payments per month. The extra four payments each year have the effect of “accelerating” the repayment of the mortgage.
  
  
• Accredited Appraiser Canadian Institute (AACI)
  The highest level of designation bestowed by the Appraisal Institute of Canada. It allows the holder to conduct appraisals and consultations on various types of property.
  
  
• Accredited Mortgage Professional (AMP)
  AMP is Canada’s only national designation for mortgage professionals. The AMP designation sets a single national proficiency standard for Canada’s mortgage professionals and is issued by the Canadian Institute of Mortgage Brokers and Lenders (CIMBL).
  
  
• Accrued Interest
  The interest charged for the period of time that has elapsed since the last interest date.
  
  
• Action for Possession
  A legal remedy available to a lender when a mortgage is in default. It allows the lender to take possession of the mortgage property.
  
  
• Action of Receiver
  A legal remedy available to a lender when a mortgage is in default, asking the courts to appoint a receiver who takes possession of the property
  
  
• Action on the Covenant for Payment
  A legal remedy available to a lender when a mortgage is in default. It gives the lender the right to sue the borrower, even if the borrower has since sold the property.
  
  
• Acquittance
  The term for a discharge of mortgage in Québec.
  
  
• Adjustable Rate Mortgage
  See variable rate mortgage.
  
  
• Affidavit
  A statement or declaration in writing and sworn to or affirmed before some officer who is authorized to administer an oath or affirmation, such as a notary public, or commissioner of oaths.
  
  
• Agreement of Purchase and Sale
  A written agreement between vendor and purchaser in which the purchaser agrees to buy certain real property and the vendor agrees to sell upon terms and conditions as set out in that agreement.
  
  
• Amortization
  This refers to the process of paying off a mortgage in regular payments composed of both interest and principal.
  
  
• Amortization Period
  The time over which the mortgage is to be completely repaid, assuming equal payments. This means that when looking, for example, at a mortgage with a 25-year amortization period, it would take 25 years to reduce the balance to zero, if all regular payments were made on time and the terms (payment, interest rate) remained the same.
  
  
• Amortization Schedule
  A table showing the amounts of principal and interest which make up each of the periodic level payments and the outstanding principal balance of the loan after each level payment is made.
  
  
• Amortized Mortgage
  A mortgage requiring regular payments which include both principal and interest sufficient to fully repay the loan by maturity.
  
  
• Anniversary Date
  The same date in each calendar year during the term of the mortgage. The first anniversary date occurs one year from the date interest is adjusted and the periodic repayments begin.
  
  
• Appointment of a Receiver
  A legal remedy available to a lender when a mortgage is in default. The receiver takes possession of the property, collects rents, and pays any expenses as required.
  
  
• Appraisal
  An independent, unbiased report that uses various analysis techniques and market research to determine the realistic value of a property.
  
  
• Appraisal Institute of Canada (AIC)
  The national professional organization that designates and represents professional real estate appraisers. The AIC sets the standards and requirements necessary to earn the    designation of Accredited Appraiser Canadian Institute (AACI) and Canadian Residential Appraiser (CRA).
  
  
• Appraisal Report
  An independent assessment of a property by a qualified individual. A statement giving an opinion of value of an adequately described property, as at a specific date and supported by pertinent data.
  
  
• Appraiser
  An appraiser determines the market value of a house based on its condition and the selling price of comparable houses recently sold in the area. The licensing requirement for real estate appraisers varies from province to province.
  
  
• Arm’s Length Transaction
  A transaction between unrelated parties. A transaction freely arrived at in the open market unaffected by abnormal pressures as might be the case in a transaction between related parties.
  
  
• Arbitration
  The determination of a dispute by a disinterested third party.
  
  
• Arrears
  An overdue payment (in reference to a mortgage for the purposes of this text).
  
  
• Assuming a mortgage
  Taking over the previous owner's (or builder's) mortgage when you buy a property.

B

• Buy down rate
  This is the portion of the interest rate on a buyer's mortgage that you assume when they buy your home. If you're selling your home and the prospective buyer doesn't like the interest rate on their mortgage, you can offer to add a certain percentage of it onto your existing mortgage.

C

• Capped rate
  An interest rate with a pre-determined ceiling - usually associated with a variable-rate mortgage.
  
  
• Closed mortgage
  A mortgage which has a fixed interest rate (usually lower than an open mortgage rate) and a set term that you cannot change. You cannot pay off a closed mortgage before the agreed end date.
  
  
• Closing costs
  Costs that are in addition to the purchase price of a property and which must be paid on the closing date. Examples include legal fees, land transfer taxes, and disbursements.
  
  
• Closing date
  The date on which the sale becomes final, the new owner takes possession of the property and funds are transferred from the purchaser to the vendor.
  
  
• Conventional mortgage
  A mortgage where the borrower is contributing more than 25% or more of the value of the property as the down payment.
  
  
• Convertible mortgage
  A mortgage that you can change from short-term to long-term, depending on your financial needs.

D

• Debt service ratio
  
  The percentage of the borrower's income used for monthly payments of principal, interest, taxes, heating costs and condo fees (if applicable).
  
  
• Default
  A homeowner is ‘in default’ when he or she breaks the terms of a mortgage agreement, usually by not making required mortgage payments or by not making payments on time.
  
  
• Down payment
  The money that you pay up-front for a house. Down payments typically range from 5%-25% of the total value of the home.

E

• Equity
  
  The difference between the market value of a property and the amount owed on the property. This difference is the amount a homeowner actually owns outright.

H

• High ratio mortgage
  A mortgage where the borrower is contributing less than 25% of the value of the property as the down payment. The minimum down payment required is 5% of the property value.
  
  Home inspection
  A visual inspection of the major components of a home by a qualified individual, who will give the home buyer a true and unbiased picture of the home's condition.
  
  Home insurance
  Insurance to cover both your home and its contents (also referred to as property insurance). This is different from mortgage life insurance, which pays the outstanding balance of your mortgage in full if you die.

I

• Interest adjustment
  The amount of interest due between the date your mortgage starts and the date the first mortgage payment is calculated from. Sometimes there is a gap between the closing date of your home purchase and the first payment date of your mortgage.

L

• Land transfer tax
  A tax that is levied (in some provinces) on any property that changes hands.

• Legal fees and disbursements
  Some of the legal costs associated with the sale or purchase of a property. It is in your best interest to engage the services of a real estate lawyer (or a notary in Quebec).

• Lump sum payment
  An extra payment that you make to reduce the amount of your mortgage. This is the same as pre-paying, which you cannot do if you have a closed mortgage.

M

• Mortgage
  A loan that you take out in order to buy property. The collateral is the property itself.
  
  
• Mortgagee/mortgagor
  Mortgagee is the lender; mortgagor is the borrower.
  
  
• Mortgage broker
  A company or individual who helps the homeowner find the right financing to buy a property. A broker does not actually lend money but seeks out a lender and arranges the mortgage terms. This may include negotiating with the lender for the best possible deal for the homebuyer.
  
  
• Mortgage default insurance
  Required if you are contributing between 5% and 25% of the value of the property as the down payment.
  
  
• Mortgage life insurance
  This form of insurance pays the outstanding balance of your mortgage in full if you die. This is different from home or property insurance, which insures your home and its contents.
  
  
• Mortgage rate
  The percentage interest that you pay on top of the loan principal. For example, you may take out a mortgage of $100,000 at a rate of 12%. Your monthly payments will consist of a portion of the original $100,000, plus 12% interest.
  
  
• Mortgage term
  The length of time the interest rate is guaranteed for a mortgage. Mortgage terms normally rate from six months to five years or more, after which you can repay the balance of the principal owning or re-negotiate the mortgage at current rates.
  
  
• Moving expenses
  The cost hiring of packers, movers or renting a van.
  
  
• Multiple Listing Service (MLS)
  A computerized listing of the properties available in your area, including information and pictures of each property.
  

O

• Offer to purchase/conditional offer
  A written contract outlining the terms under which the buyer agrees to purchase the property. There may be conditions attached to the offer, for example: offer being subject to arranging the mortgage or selling a home.
  
  
• Open mortgage
  A mortgage which you can pay off, renew or refinance at any time. The interest rate for an open mortgage is usually higher than a closed mortgage rate.

P

• Porting
  Transferring an existing mortgage from one home to a new home when you move. This is known as a "portable" mortgage.
  
  
• Pre-approved mortgage certificate
  A written agreement that you will get a mortgage for a set amount of money at a set interest rate. Getting a pre-approved mortgage lets you shop for a home without worrying how you'll pay for it.
  
  
• Pre-paid property tax and utility adjustments
  The amount you will owe if the person selling you the home has pre-paid any property taxes or utility bills. The amount to reimburse them will be calculated based on the closing date.
  
  
• Pre-payment
  Repaying part of your mortgage ahead of schedule. Depending on your mortgage agreement, there may be a penalty for pre-paying.
  
  
• Property survey
  A legal description of your property and its location and dimensions. An up-to-date survey is usually required by your mortgage lender. If not available from the vendor, your lawyer can obtain the property survey for a fee.

R

• Refinancing
  Increasing the amount of your current mortgage, at a new interest rate. The term of the new mortgage must be equal to or greater than the term remaining on your current mortgage.
  
  
• Renewal/renewing
  Once the original term of your mortgage expires, you have the option of renewing it with the original lender or paying off all of the outstanding balance.

S

• Sales taxes
  Taxes applied to the purchase cost of a property. Some properties are sales tax exempt (GST and/or PST), and some are not. For instance, residential resale properties are usually GST exempt, while new properties require GST. Always ask before signing an offer.
  
  
• Service charges
  The extra costs payable for hooking up hydro, gas, phone, etc. to a new address.

V

• Variable rate mortgage
  A mortgage with an interest rate that changes with the market. The rate changes each month, so the portion of your monthly payment that goes towards interest may go up or down each month. But your total monthly payment will probably stay the same.