of Location or Survey - A document specifying the exact
location of the building on the property and describing the
type and size of the building including additions, if any.
of Search or Abstract of Title - A document setting out
instruments registered against the title to the property, e.g.
deed, mortgages, etc.
date on which the sale of a property becomes final and the new
owner takes possession.
Canada Mortgage and
Housing Corporation. CMHC administers the National Housing Act
of Canada and provides default insurance on mortgages where
the down payment is less than 25%.
Letter: This is
the document that your lender will confirm the basic terms and
conditions upon which the lender will provide the mortgage and
indicate the conditions that must be met before funding.
Mortgage - A mortgage that does not exceed 75% of the
purchase price of the home and require insurance.
Ratio - The percentage of the borrower's gross income
that will be used for monthly payments of principal, interest,
taxes, heating costs and condominium fees.
(Certificate of Ownership) - The document signed by the
seller transferring ownership of the home to the purchaser.
This document is then registered against the title to the
property as evidence of the purchaser's ownership of the
Pay-out Penalty: Many
people don’t think about breaking their mortgage when they
are in the midst of arranging it, however, this possibility
cannot be overlooked. Some mortgages are fully closed
and cannot be broken under any circumstance. Other mortgages
have a sales clause allowing for early payout of the mortgage
upon an arms-length sale of the property, subject to a penalty
(for example, three months interest). Some mortgages allow the
borrower to break the mortgage, for any reason, upon payment
of a penalty.
Debt Service (GDS) Ratio - The percentage of gross
income required to cover monthly payments associated with
Most lenders recommend that
the GDS ratio be no more than 32% of your gross (before tax)
Ratio Mortgage - If you don't have 25% as a down
payment your mortgage must be insured against payment default
by a Mortgage Insurer, such as CMHC.
difference between the value of the property and the mortgage.
Adjustment Date: This may apply to
mortgages that close on any day other than the requested day
instances: since some lenders want monthly payments to be made
on the first day of the month, they will adjust the interest
due on closing so that interest on your mortgage is paid up
until the first of the coming month. If you close on the 20th
of the month (and the month has 30 days), you will have to pay
interest for 10 days so that you are paid up until the first
of the coming month. Then your first full mortgage payment
will be due on the first of the following month.
Rate: The rate of
interest is a key consideration when arranging your mortgage.
The interest is the payment to the lender for the use of the
interest rate can be fixed (where the rate remains constant
for the term) or variable (where the rate changes at regular
Date - Last day of the term of the mortgage agreement.
A contract between a borrower
and a lender, where the borrower pledges a property to a
creditor as security for the payment of a debt.
"Charge" is another word for mortgage.
Life Insurance: Life
insurance that pays off the balance of the mortgage in the
case of the borrowers death (i.e., if a spouse dies, the
remaining spouse would not have to worry about mortgage
payments – it would be paid in full). The monthly cost of
getting this insurance through the lender is typically less
costly than similar coverage obtained directly from an
Term - The number of years or months over which you pay
a specified interest rate. Terms usually range from six months
to 10 years.
frequency options: You
will often have the choice of making payments on your mortgage
on a monthly, semi-monthly, bi-weekly or weekly basis.
Increasing the payment frequency, i.e., bi-weekly instead of
monthly, can shorten the amortization of your mortgage and
save you a considerable amount of interest.
chequing/debit: In this
computer age, mortgage payments are normally made by
pre-authorized chequing or debit where the lender takes your
regular monthly, semi-monthly, bi-weekly, or weekly payment
out of a predetermined bank account automatically.
privileges allow you to make extra lump sum payments, double
your payments or increase your regular payments.
Principal: The amount of the
If you have a good mortgage
rate and a number of years remaining on your term, you may
want to take your mortgage with you to a new home when you
move. This can be done if the mortgage is portable. The
property you are moving to will have to be reviewed and
approved by the lender before you can "move" the
mortgage to the new property.
- Renegotiating your existing mortgage agreement. May include
increasing the principal or paying out the mortgage in full.
period of time, prior to closing of your house purchase
("the completion date") that a lender will guarantee
that the interest rate they have offered will not rise. This
is usually for a period between 60 and 90 days. The
commitment letter will also state under what conditions (if
any) that they will decrease the interest rate if and when
rates in general drop prior to your completion date.
mortgage fees: All
mortgages have standard fees associated with them such as
renewal fees, discharge fees, NSF fees, etc.
holdback: When property
taxes are included with your mortgage payments, your lender
will hold back funds from your mortgage proceeds to cover
interim or final property taxes payable to the municipality.
The amount depends on the month the mortgage was funded and on
the dates when interim and final taxes are due. Holdbacks are
used to pay for the current year’s taxes, while your monthly
tax installments are accumulated in the account to pay for the
next year’s taxes.
This is the period of
time that the interest rate and the loan is contracted for.
Terms can vary from 3 months to 25 years.