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Amortization Period:
The actual
number of years it will take to pay back your mortgage loan.
Appraised Value:
An estimate
of the value of the property and not always the Purchase
Price. Conducted for the purpose of mortgage lending by a
certified appraiser. This appraisal is not to be confused with
a building inspection.
Assumability:
Allows the
buyer to take over the seller's mortgage on the property.
Closed
Mortgage:
A mortgage
that locks you into a specific payment schedule. A penalty
usually applies if you repay the loan in full before the end
of a closed term.
Condominium:
The owner has
title to a single unit, as well as a share in the common
elements such as elevators or surrounding land.
Condominium Fee:
A monthly
common payment among owners which is allocated to pay
expenses.
Conventional Mortgage:
A mortgage
loan issued for up to 75% of the property's appraised value or
purchase price, whichever is less.
Down
Payment:
The buyer's
cash payment toward the property. The difference between the
purchase price and the amount of the mortgage loan.
Equity:
The
difference between the home's selling value and the debts
against it.
High-Ratio Mortgage:
A mortgage
that exceeds 75% of the home's appraised value. These
mortgages must be insured for payment.
Interest
Rate:
The value
charged by the lender for the use of the lender's money.
Expressed as a percentage.
Land
Transfer Tax:
A fee paid to
the government for the transferring of property from seller to
buyer.
Maturity
Date:
The end of
the term, at which time you can pay off the mortgage or renew
it.
Mortgagee:
The person or
financial institution that lends the money.
Mortgagor:
The borrower
of the money.
Mortgage
Insurance:
Applies to
high-ratio mortgages. It protects the lender against loss if
the borrower is unable to repay the mortgage.
Mortgage
Life Insurance:
Pays off the
mortgage if the borrower dies.
Open
Mortgage:
Allows
partial or full payment of the principal at any time, without
penalty.
Portability:
A mortgage
option that enables borrowers to take their current mortgage
with them to another property, without penalty. A transfer fee
may apply.
Pre-Approved Mortgage:
Qualifies you
for a mortgage before you start shopping. You know exactly how
much you can spend and are free to make a "firm" offer when
you find the right home.
Prepayment Privileges:
Voluntary
payments in addition to regular mortgage payments.
Principal:
The amount
borrowed or still owing on a mortgage loan. Interest is paid
on the principal amount.
Refinancing:
Paying off
the existing mortgage and arranging a new one or
re-negotiating the terms and conditions of an existing
mortgage.
Renewal:
Re-negotiation of a mortgage loan at the end of a term for a
new term.
Second
Mortgage:
Additional
financing. Usually has a shorter term and higher interest rate
than the first mortgage.
Term:
The length of
time the interest rate is fixed. It also indicates when the
principal balance becomes due and payable to the lender.
Title:
Legal
ownership in a property.
Variable-Rate Mortgage:
A mortgage
with fixed payments, but fluctuates with interest rates. The
changing interest rate determines how much of the payment goes
towards the principal.
Vendor
Take-Back Mortgage:
When the
seller provides some or all of the mortgage financing in order
to sell their property |
