Glossary

Below you will find a listing of common (although sometimes confusing) terms used in regards to Canadian mortgages. A brief description is shown below, click the term to read the full definition.

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

Adjustable Rate Mortgage - A mortgage rate that fluctuates or floats with the Bank of Canada’s prime lending rate.

Amortization - Number of years it takes to repay the entire amount of the mortgage, most often twenty-five years.

Appraisal - An independent assessment of the value of a property, which may or may not equal the purchase price.

Assumable Mortgage - If the buyer of a property takes over the conditions of the seller's mortgage the amount owing for the remaining term at the existing rate ... [full definition]

Blended Rate Mortgage - A blended rate mortgage may be used if you want or need to increase the amount of your present mortgage This could happen if you ... [full definition]

Closed Mortgage - A mortgage that cannot be prepaid renegotiated or refinanced prior to the end of the term without incurring a prepayment penalty.

Closing Costs - Closing costs include but are not limited to property purchase transfer tax legal fees strata fees fire insurance appraisal and survey fees and property tax ... [full definition]

Closing Date - The date on which legal ownership of a property is transferred from seller (vendor) to buyer (purchaser).

CMHC - Canada Mortgage and Housing Corporation a federal crown corporation provides mortgage default insurance to financial institutions so Canadians can buy a home with as little ... [full definition]

Conventional Mortgage - A conventional mortgage requires a down payment of at least of the purchase price Conventional mortgages have the lowest carrying costs because they do not ... [full definition]

Details - The little things that matter.

Down Payment - The portion of the purchase price that the buyer must pay up front from their own resources (not borrowed funds).

Equity - The difference between the price for which a home could be reasonably sold and the debts registered against it.

Fire Insurance - The purchaser must have fire insurance in place prior to receiving any mortgage funds.

Fixed Mortgage - The interest rate and payment are fixed and won’t change for the duration of the term.

Gross Debt Service Ratio (GDS) - The percentage of the borrower’s gross monthly income that will be used for monthly payments of principal, interest, taxes, heating and condominium fees.

Gross Income - The amount you make before taxes. This is usually substantially more that your Net Income.

High Ratio Mortgage - A mortgage in excess of of the appraised value must be insured against payment default CMHC and GE are the only providers of default insurance ... [full definition]

Inspection - The examination of the house for structural and other defects by an expert chosen by the buyer.

Interest - The cost of borrowing money, usually expressed as an annual percentage rate.

Interest Rate - This is the amount of interest you will be charged. This is generally a percentage of the total amount borrowed.

Lawyer - Your lawyer ensures that your legal interests are protected when you buy a property Their job is to review any contracts involved in buying such ... [full definition]

Mortgage - Money is borrowed from a lender to buy property The lender registers the debt the mortgage document against the property to ensure the money is ... [full definition]

Mortgage Broker - An individual who works for a financial institution or brokerage who specializes in commercial or residential mortgages Mortgage professionals act as a mediator between the ... [full definition]

Mortgage Default Insurance - Insurance to protect a lender in the case of default which allows borrowers to purchase a home with as little as 5% down.

Mortgage Professional - An individual who works for a financial institution or brokerage who specializes in commercial or residential mortgages Mortgage professionals act as a mediator between the ... [full definition]

Mortgagee - A lender who advances mortgage funds to a borrower and uses the property as collateral for the loan.

Mortgagor - A borrower who receives mortgage funds in return for a personal guarantee to repay the monies and pledges the property as collateral for the loan.

Net Income - The amount of money you take home after taxes.

Notice of Assessment - Notice of Assessments are issued by the CRA when they have received your filed income taxes

Open Mortgage - A mortgage that can be repaid at any time without penalty.

Pre-payment Options - The right to pay extra or prepay certain amounts of the principal prior to maturity of the term without penalty.

Prepayment Penalty - A penalty paid to an existing lender to get out of a closed term in part or in full prior to maturity of the mortgage ... [full definition]

Prime Rate - The Bank of Canada's prime interest rate, generally speaking - the lowest of the low... [more]

Principal - The amount of money actually borrowed.

Realtor - A licensed agent who negotiates the purchase and sale transaction between the buyer and the seller.

Survey - A document that illustrates the property boundaries and measurements, specifies the locations of buildings on the property, and indicates any easements or encroachments.

T1 generals - T1's are your personal tax returns that are filed with CRA

Total Debt Service Ratio (TDS) - The percentage of the borrower s gross monthly income that will be used for monthly payments of principal interest taxes heating and other outstanding loans ... [full definition]

Variable Rate - An interest rate that fluctuates or floats with the Bank of Canada’s prime lending rate.

Yogi - A Yogi is a practitioner of Yoga The word is used to refer to ascetic practitioners of meditation in a number of Eastern Religions including ... [full definition]