| |
|
| 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 mortgage whose interest rate changes periodically usually when there is a change in the prime rate set by the major-chartered banks. Amortization The amount of time to allow for the total repayment of a mortgage loan by blended payments of principal and interest. Annual Percentage Rate (APR)- also called "Effective Interest Rate" The total cost of mortgage stated as annual interest rate; included is the interest, default insurance, legal fees, appraisal costs, and provincial sales tax if applicable. Appraisal Report A written report of the estimated market value of a property prepared by a certified appraiser. Appraiser A person qualified and certified to estimate the market value real estate. The most acceptable designations in Canada are; 1) AACI 2) CRA 3) MVA. Appreciation The increase in the value of real property due to a variety of factors; market conditions, renovations, etc. Assignment The transfer of ownership of a mortgage from one party to another. Assumable Mortgage An existing mortgage of a home seller that can be taken over or "assumed" by the buyer of a property. Usually requires the qualifying of the buyer by the lender. Assumption The transfer of the seller's existing mortgage to the buyer. Usually requires the permission of the lender. A basis point is 1/100th of one percent. Beneficiary The person designated to receive the benefits of a will, a trust or an insurance policy. Bi-Weekly Mortgage Payments A payment schedule that requires blended payments of principal and interest every 14 days. These payments can be calculated two separate ways, only one of which has substantial benefit to the borrower. Example: $100,000.00 mortgage at 7.0%/25 year amortization, will have monthly payments of $700.42. A few lenders will multiply the $700.42 x12 (months in a year)= $8,404.99, then divide that number by 26(the number of bi-weekly periods in a year)=$323.27. At this rate it would take about 24.5 years to pay off the mortgage. A "true" bi-weekly mortgage would take the $700.42 monthly payment, divide it by two ($350.21) then x 26(the number of bi-weekly periods in a year)=$9,105.46, which is the equivalent to making 13 monthly payments in a 12 month period. At this rate it would take about 18 years to pay off the mortgage. Blanket Mortgage A lien against two or more pieces of real estate, as security for a single debt. Bridge Loan Usually a form of second mortgage against a borrower's existing property (which is for sale, or sold and not closed) which allows for the proceeds to be used in closing on the purchase of another property, before the existing property is closed. Buydown Mortgage A mortgage where a home seller (often a builder) will offer a mortgage for a specific term, at lower than market interest rates rates. This is done to entice some buyers and to allow other buyers, who would not otherwise qualify, to qualify for the mortgage. An agency of the Canadian Federal Government charged with implementing a national housing policy. CMHC is actively involved mortgage insurance, market research, housing technology and the national building code. Charge An encumbrance on land by way of mortgage as registered in the Land Tiles System. Chargee The on to whom the property is pledged as security for the payment of the debt; the lender Chargor The one who gives the charge; the borrower Charge Terms A set of specific terms and conditions agreed to between a chargee and chargor. Chattel A moveable possession, or personal property, which can be removed from real property without injury to the freehold estate. Chattel Mortgage A lien against a moveable possession (cars, boats, trailers) or personal property (appliances) as security for a debt. Clear Title The title to real property which is free of any liens or questions as to the legal ownership of the property. Closed Mortgage A mortgage, which can not be paid in full, prior to the expiry of the mortgage term. Most mortgages will allow the early pay out of a mortgage, prior to maturity, but only if a "prepayment penalty" is paid. Closing Date Day on which the real estate transaction is scheduled to be completed, and title passes from the seller to the buyer. Closing Costs Costs paid by the various parties to the real estate transaction. E.g. legal fees, disbursements, commissions, provincial sales taxes, GST, etc. Closing Statement A complete itemized financial history of the real estate transaction. Cloud on Title Any claim or encumbrance that may affect title to real property. Collateral Mortgage A loan secured by a promissory note and further secured by a mortgage on real property. Conditional Sales Lien A claim by which a supplier of goods retains title to the products, and the right to remove the products installed on a property, until full payment has been made. Condominium The fee simple ownership of a specified space, "the unit", in a multi-occupancy property, with tenancy-in-common ownership of the portions used jointly with other owners, "the common elements" Conventional Mortgage A first mortgage granted by an institutional lender (bank, trust company, credit union, etc) where the loan amount does not exceed 75% of the value of the property, and the loan is not insured or guaranteed by any third party (CMHC, GE Capital). Credit An agreement where a borrower receives something of value in exchange for a promise to return or repay the lender a some specific time in the future. Credit Bureau A "for profit" business which acts as a clearinghouse for all credit related information. Any company that requires credit information on existing or new clients may, for a fee request information from the credit bureau. Most lenders (banks, credit card companies, mortgage companies and auto finance companies belong to the credit bureau. Credit Report A report prepared by a credit bureau about an individual's past payment history, and used by a lender in determining a potential client's creditworthiness. A legal document which conveys title or an interest in real property. Default Failure to fulfill a promise or obligation. In the case of a mortgage the most common types of default are nonpayment of the mortgage, non-payment of taxes, non-payment of insurance and allowing the property to fall into disrepair. Deposit Payment of money, or the giving of some valuable consideration as a pledge for the fulfillment of a contract. Depreciation The loss of value for any reason. Discharge of Mortgage/Cessation of Mortgage The preparation, execution and registration of a specific document, which indicates that a previously registered mortgage, has been cleared from the property's title. Down Payment That portion of the price of a purchased property, which comes from non-borrowed funds. Due on Sale Clause A clause in a mortgage document that allows the lender to demand full repayment of the mortgage when the owner sells the property i.e. the mortgage is not assumable. Discounting The process of buying or selling a mortgage at a price lower than its face amount or remaining principal balance so as to increase the yield to the purchaser of the mortgage. The right enjoyed by one party over another's property, once granted runs with the title. E.g. the local electrical utility has an easement over your property to run electrical wires and conduits. Economic Life The period of time over which improvements (buildings) contribute value to the property. Encumbrance Lien or claim against the property, or any right to use the property, by a person whom is not the property owner. Equity The difference between the value of the property and total of all mortgages, liens and encumbrances registered against the property. Equity Financing Money lent based primarily on the owner's equity in the property with secondary consideration to the owner's covenant. Estate The degree, quantity, nature and extent of a specific interest in real estate. Eviction Notice/ Writ of Possession A written legal notice to mortgagor or tenant to vacate a property for specific causes within a specific time frame. The highest interest or right in real property. Final Order of Foreclosure A court granted judgement against a mortgagor, extinguishing any rights the mortgagor has to the property. First Mortgage A mortgage that has the first priority lien by registration on the property. Foreclosure A remedial court action taken by a mortgagee, when a mortgagor is in default, to cause forfeiture of the equity of redemption of the mortgagor and also all subsequent encumbrancers. Maximum percentage of a borrower's gross family income which may be used to service "shelter payments", of principal, interest, municipal taxes, heat and half of condo maintenance fees. (See example in consumer information section of this site.) Guarantor A person providing a separate personal covenant (guarantee) as additional security for a contract (loan, mortgage, etc.) A metric measurement of area of 100 metres x 100 metres=2.4711 acres=107,639.1042 square feet. High Ratio Mortgage A first mortgage granted by an institution where the loan to value exceeds the limits of a conventional mortgage (usually 75% LTV) and the mortgage is insured against default. Home Equity Line of Credit A revolving credit line usually secured by a second lien on a property. Usually requires payments of interest only. Home Equity Loan A term loan secured by a second lien on a property. Usually requires amortized payments of principal and interest. Lenders require a variety of documentation to prove adequate income to support payments on a mortgage loan. Letters of income and employment, Income tax notices of assessment, pay stubs, etc are all types of the documentation that may be required. Interest Act Canadian Federal law which deals in part with interest on loans secured by a mortgage on real property. The Interest Act dictates the methods on how interest is calculated for mortgages. Interest Adjustment Date The date in a blended payment mortgage plan, prior to the commencement of a mortgage term, to which interest accrued since the closing date is calculated. A court order for debtor to pay a creditor. Judicial Sale A form of remedy available to a mortgagee, when a mortgagor is in default. Effectively a judicial sale is a court-controlled sale of the property, under specified conditions set out by law and the court. Any type of encumbrance affecting the title to the property. Loan to Value Ratio (LTV) The ratio of the amount of mortgage financing divided by the market value of the property and expressed as a percentage. E.g. a property has a $71,500.00 first mortgage and has a market value of $100,000.00, therefore the loan to value ratio is 71.5% Highest price in terms of money, which the property will bring to a willing seller if exposed for sale on the open market; allowing a reasonable time to find a willing purchaser, buying with the knowledge of all the uses to which it is adapted and for which it can be legally used, and with neither party acting under necessity, compulsion or peculiar and special circumstances. Mortgage A charge on the land or the conveyance of title of land as security for a debt, with the right of redemption of title or cessation of charge upon repayment of the debt. Mortgage Assignment The transfer of a mortgagee's rights, interest, and ownership in a specific mortgage to a new mortgagee. E.g. Mr. Smith, in the process of selling his home, agreed to take back a second mortgage for $20,000.00 from Mr. Jones, the home buyer. Mr. Smith needed to money to buy another house so he sold (assigned) the mortgage to Mr. Green, the buyer of the mortgage. Mortgage Assumption The transfer of the title of a property to a grantee (buyer) whereby the grantee assumes liability for an existing mortgage registered against the property. Mortgage Commitment More appropriately referred to as an "offer to lend". A written indication that a lender is willing to grant a mortgage loan based on certain terms, conditions and limitations. Mortgage Broker A person who, for remuneration, negotiates the buying selling or arranging of a mortgage on real estate. In most provinces in Canada mortgage brokers must undergo specific training and be registered or licensed, with the provincial government. Mortgagee The person or organization who receives a mortgage as security for the payment of a debt. "I'd rather be a mortgagee" Mortgagor The person or organization that gives a mortgage as security for a debt. "The mortgagor is the borrower" A mortgage, which allows some form of prepayment, greater than allowed by the regular payment schedule, with or without a penalty. Generally refers to a blended mortgage payment, which includes payment of Principal, Interest and Taxes. Postponement Clause A clause contained in a subsequent mortgage, which allows a prior mortgage to be renewed or replaced without losing its priority claim. Power of Sale The right of a mortgagee to force the sale of a property, when a mortgage is in default, without court proceedings. Pre-Approved Mortgage A mortgage approval offered by a lender where the lender has completed a full investigation of the borrower (application, credit bureau report, income and employment verification, down payment verification). The approval is usually subject to an appraisal on the purchased property. By having a documented pre-approval a potential buyer knows the maximum purchase price they can afford and gives their realtor better leverage in house price negotiations. Prepayment Penalty A fee paid to a mortgagee that allows the mortgagor to pay out or pay down the principal owing on a mortgage, prior to the scheduled maturity date of the mortgage. Principal The amount of a debt, not including interest. The process of paying off one loan with the proceeds from another loan, using the same property as security for the debt. Reverse Mortgage A concept that allows someone to borrow against a property, receive monthly payments or a lump sum, while retaining possession and ownership. Payments of principal and interest are not required until the owner sells the home, permanently moves from it, or dies. The concept behind a reverse mortgage is to provide funds so that a person, usually a senior citizen, can remain in their home and have funds to maintain the property. A written disclosure required by some provincial regulations, which details all terms and costs of the mortgage. Survey The accurate mathematical measurement of land and improvements thereon, with the aid of instruments and carried out by a qualified surveyor. A form of insurance which for a one time fee, will protect a lender (with some policies also the buyer of a property) against defects in title to a property. Title insurance is often used to eliminate the need for an up-to-date survey. Total Debt Service Ratio The ratio of payments of principal, interest, and taxes plus total payments on all consumer debts divided by gross family income and expressed as a percentage. (See example in consumer info section of this web site.) A form of mortgage in which the interest rates fluctuates during the term of the mortgage. Interest rates are usually tied to the bank prime rate, and rise and fall accordingly. Should rates rise then payments must also rise to keep in step with the original amortization schedule. Vendor Take Back Mortgage Occurs when the seller of a property retains an interest, for a portion of the purchase price by way of a mortgage. To relinquish some right set out as a condition, in a written agreement of purchase and sale. Water Potability Test A test performed by a local municipal health unit of well water, or any water intended for domestic use not processed through a water treatment plant. The test is designed to detect two common forms of disease causing bacteria, e.coli and fecal coliform bacteria. |
