|
Accelerated Payments: Anytime you pay more than the minimum mortgage payment. Most often calculated by taking the monthly payment and dividing it by 2 while making payments every two weeks. This allows the mortgagor to pay 2 additional payments as there are 26 bi-weekly payments opposed to 24 semi-monthly payments. |
|
Accrued Interest: Interest that is earned but not paid, adding to the amount owed |
|
Agreement of
Sale: A contract signed by the buyer and seller stating the terms and conditions under which a property will be sold. |
|
Amortization: The lifetime of the loan |
|
Amortization Schedule: A table showing the mortgage payment, broken down by interest and amortization along with principal balance over the lifetime of the mortgage |
|
Appraisal: A written estimate of a property's current market value prepared by an appraiser. |
|
Appraisal fee: A fee charged by an appraiser for the appraisal of a particular property. |
|
Approval: Acceptance of the borrower's loan application from the lender. Further verification of facts maybe needed. (E.g. Letter of Employment) |
|
Assumption: A method of selling your property where the buyer of the property agrees to become responsible for the repayment of the current mortgage. In most cases the seller remains liable for the mortgage for minimum of one year. |
|
Bridge Loan: A short-term loan, usually from a bank, that "bridges" the period between the closing date of a home purchase and the closing date of a home sale. To qualify for a bridge loan, the borrower must have a contract to sell the existing house. |
|
Bona Fide Sale: An arms length sale |
|
Canadian Bank Rate: The rate at which the central bank of Canada lend funds to national banks |
|
Closed Mortgage: A mortgage product which states that it can not be paid out. Most lenders do allow for the mortgage to be paid out with payment of a penalty. |
|
Closing: On a home purchase, the process of transferring ownership from the seller to the buyer. This is the day in which the deal is completed and funds change hands |
|
Closing Date: The date on which the closing occurs |
| Canadian Mortgage and Housing Corp (CMHC): A federal crown corporation which administers the "National Housing Act" (NHA), and through which all federal housing policies and programs are implemented. They provide mortgage insurance in case of mortgagor default. |
|
Conventional Mortgage: Mortgages that do not exceed 75% of the purchase price of value which ever is lower. |
|
Conversion Options: allows you to lock into a longer term at no penalty. |
|
Credit Report: A record of an individual's payment history available at a credit bureau. |
|
Debt Consolidation Rolling short-term debt into a home mortgage loan, either at the time of home purchase or later. |
|
Discharge: paying off the mortgage in full |
|
Down Payment: the money paid towards the purchase of the property |
|
Equity: In connection with a home, the difference between the value of the home and the balance of outstanding mortgage loans on the home. |
|
ETO: Borrowing against the equity built up in the home. |
|
Fixed Rate: A mortgage on which the interest rate and monthly mortgage payment remain unchanged throughout the term of the mortgage. |
|
GE Capital: Canada's only private mortgage insurer |
|
Gross Debt Servicing:
( Principal)+ (interest) +(taxes) +(heating)+ (condo fees) (answer) * 100 = <32% High Ratio Mortgage:This means that month shelter costs can not exceed 32% of your monthly income |
|
Interest Adjustment: Mortgage financing between 75.1% and 95% of the purchase price or appraisal value which ever is lower |
| Daily Interest due from the closing date
until your first mortgage payment. Mortgage payments run the opposite of
rent-meaning your January 1st payments pays for the month of December not
February. E.g. Mortgage funds on December 25th and your first mortgage payment is January 1st. The interest adjustment period would be from December 25 to the 1st – so 7 days interest would be due on January 1 and the first full monthly payment would be February 1. |
|
Income Verification: Documentation such as letters of employment, paystubs, notice of assessment that prove your stated income. |
|
Land Transfer Tax: A tax payable to the Provincial Government by the purchaser upon the transfer of title from a seller. |
|
Loan to Value: The amount of the loan divide by the value of the property |
|
Mortgagee: Lender |
|
Mortgagor: Borrower |
|
Mortgage Life Insurance: Insurance so that if the mortgagor were to die suddenly the mortgage would be repaid to the lender in full |
|
Open Mortgages: Mortgages in which the terms states that the mortgage can payout, transfer, or changes products without incurring a penalty. |
|
Penalties: Fees for breaking the mortgage contract before the stated end of term |
|
Prepayment Options: The ability to pay off a portion of the principal balance without incurring a penalty. |
|
Refinance: Using the equity in your home to get cash |
|
Simple Interest: Interest which is computed only on the principal balance. It is not compounded by calculating interest payable on accrued interest. |
|
Survey: Map of the property-this is a legal document providing the location and dimension of your property |
|
Switch: Changing lenders at the end of your term- when your mortgage is in the open period |
|
Term: The time frame you are locked into the current rate. (E.g. 2,3,4,5,7 and 10 years) |
|
Title Insurance: Insurance offered by Title Companies to protect a landowner, and thus the mortgage lender against any "clouds" or legal questions on the title to the real estate, or of legal priority of the mortgagee.Total Debt Servicing Ratio: |
|
(all shelter costs) + (all other
monthly debt obligations) Meaning your total monthly obligations should not exceed 40% of your monthly income |
|
Variable Rate: A fluctuating interest rate. This rate changes with the Bank of Canada’s prime rate. The Bank of Canada meets 8 times a year so there are 8 possible changes per year. |
