Canadian
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Amortization
The actual number of years it will take to repay a mortgage loan in full. Generally up to 25 years is available.

A.R.M.
Adjustable rate mortgage whereby the rates fluctuate, on an ongoing basis as the Prime interest rate at the bank change. A good product for the seasoned mortgage borrower.

Appraised Value
An estimate of the value of the property offered as security for a mortgage loan. Usually completed by an independent accredited appraisal firm.

Assumption of Mortgage
Assuming or taking over the existing mortgage on the property being purchased. Depending on the terms within the mortgage document this can be done either with or without a qualifying process.

Blended Payments
A method of repayment where principal and interest remain constant in their amount. Blended Mortgage: If your mortgage is portable - and you need extra funds the new mortgage can be added to the old and the rate/term is blended. Some lenders also offer Split Mortgages so you can take a new term for the extra funds.

Closed Mortgage
A mortgage agreement which does not provide for prepayment prior to maturity without some form of prepayment penalty.

CMHC
Canada Mortgage and Housing Corporation. A high ratio mortgage
insurer. Commitment Letter- This letter is the lenders commitment to
provide mortgage financing within a specified time
and according to the terms and conditions contained therein.

Completion Date
The date on which the purchase and sale of a property becomes final. Accordingly all documentation must be completed and payment of funds made by this date.

Compound Interest
Interest charged not only on the principal sum but also on interest amounts charged in a previous
period.

Conventional Mortgage
A mortgage loan which does not exceed 75% of the purchase price or appraised value whichever
the lesser.

Conveyance
Transfer of title to the property at Land Titles Office from the vendors name to the purchasers
name.

Default
Non-payment of the installments due under the terms of the mortgage(s).

Discharge
The removal of all mortgages and financial encumbrances on a property.

Foreclosure
A legal procedure whereby the lender obtains ownership of the property following default by the
borrower.

Gross Debt Service Ratio (GDSR)
This is the total cost of housing payments (this includes principal, interest, taxes, and sometimes
heat and maintenance) divided by the family's total gross income Generally this ratio should not exceed 32%.

Interest Adjustment Date
A date usually one month prior to the first regularly scheduled mortgage payment date from
which interest is calculated for monies advanced previous to that date.

Leasehold Mortgage
A mortgage on a property which is on land that is leased as opposed to freehold.
.
Loan to Value
The ratio, expressed as a percentage, of the mortgage to the appraised value or purchase price
which ever the lesser.

Mortgage Insurance Premium
A premium which is added to the mortgage and paid by the borrower over the life of the mortgage.
The mortgage insurance insures the lender against loss in case of default by the borrower.

Mortgage Life Insurance
A form of reducing term insurance recommended for the borrower. In the event of the death of the owner or one of the owners, the insurance pays the balance owing on the mortgage. The intent is to protect survivors from losing their home.

Mortgagee
The lender.

Mortgagor
The borrower.

Offer to Purchase
A formal legal document which offers a specific price for a specified real property. The offer
may be firm (with no conditions) or conditional (certain conditions yet to be fulfilled.)

Open Mortgage
A mortgage that permits prepayment in whole or in part of the principal balance without notice or bonus.

Penalty
A sum of money paid to a lender for the privilege of prepaying a mortgage in part or in full.

P.I. (Principal & Interest)
Principal and interest due on a mortgage.

P.l.T. (Principal, Interest, & Taxes)
Principal, interest and taxes due on a mortgage.

Prepayment Option
The right to prepay specified amounts of the principal balance. Penalty interest may be incurred
on prepayment options.

Principal
The amount you still owe the lender at any time.

Rate (interest)
The return the lender receives for loaning you the money for the mortgage.

Roll-over Mortgage
A mortgage loan where the interest rate is established for a specific term. At the end of this term the mortgage is said to "roll over" and the borrower and lender may agree to extend to loan. If satisfactory terms cannot be agreed upon, the lender is entitled to be repaid in full. In this case, the borrower may seek alternative financing.

Second Mortgage
This is usually at a higher interest rate and represents the difference between the price of the house and first mortgage plus the down payment. This may be obtained from banks and finance companies or through lawyers or notaries.

Survey
The accurate mathematical measurements of land and the buildings thereon made with the aid of instruments.

Term
The length of time the mortgage agreement exists. At the expiry of the term the contract may generally be renewed for a further term and the rate renegotiated.

Total Debt Service Ratio (TDSR)
This is the total cost of housing payments plus all other installment payments divided by the family's total gross income. Generally this ratio should not exceed 42%.

Underwriting Fees
A sum of money collected by some lenders to offset expenses incurred in the lending
transaction.

Variable Rate Mortgage
A mortgage loan for which the rate of interest changes with market conditions. Usually the monthly payment amount is fixed for a stipulated period but the amount of principal reduction varies according to the rate of interest.

Vendor Financing (Balance of Sale)
The seller sometimes takes the mortgage at a rate lower than market rates. Most of these arrangements are not renewable nor transferable to the next owner.