Agreement of Purchase and Sale
A contract by which one party agrees to sell and another agrees to purchase.
The gradual repayment of a debt by means of partial payments
on the principal at regular intervals. The amortization period is
the time required to repay the debt completely.
Process by which the mortgage lending value of a property is determined.
Bridge Financing TOP
Interim financing to bridge between the closing date on the purchase
of the new home and the closing date on the sale of the current home.
An intermediary between the buyer and seller who is licensed to carry
out such activities.
Closing Date TOP
The date of which the sale of the property becomes final and the new
owner takes possession.
A notice from a mortgage lender to a prospective borrower that the
lender will advance mortgage funds of a specified amount under certain conditions.
A clause in a contract that calls for the happening of some
event, or performance of some act before the agreement becomes binding.
Conditional Offer TOP
An offer to purchase subject to specified conditions. These conditions
could be the arranging of a mortgage, or the selling of a present
home. Usually a time limit in which the specified conditions must
be met is stipulated.
A mortgage loan of up to a maximum of 80% of the lending value of
the property for which a lender does not require loan insurance.
Non-payment of installments due under the terms of the mortgage.
Payment of money or other valuables in consideration as a pledge for
fulfillment of the contract.
The removal of all mortgages and financial encumbrances on the property.
The right acquired for access to or over another person’s land for
a specific purpose, such as for a driveway or public utilities. This
is referred to as a “servitude” in the Province of Quebec.
Gross Debt Service Ratio is a primary calculation
used by lenders and mortgage insurer to determine an applicant's ability
to service their respective mortgage request. The calculation is determined
Mortgage Principle, Interest & Taxes
and/or 1/2 of Condo Fees
annual income of borrower(s)
High Ratio Mortgage TOP
Loan that exceeds 80% of the property’s lending value, and
which is insured through a mortgage insurance plan.
An amount of money withheld by the lender during the progress
of construction of a house to ensure that construction is satisfactory
at every stage. The amount of hold-back is generally equivalent to
the estimated cost to complete construction.
Land Transfer Tax
Mortgage Life Insurance TOP
A form of reducing term insurance available for all mortgagors. In
the event of a death of the owner or one of the owners, the insurance
pays the balance owing on the mortgage. The intent is to protect survivors
from losing their home.
Mortgage Loan Insurance (High
High ratio mortgages must be insured through CMHC (Canada Mortgage
and Housing Corporation) or GENCOR (G.E. Capital Corporation). These
Insurers guarantee the risk of lending to home buyers who need a high
ratio mortgage. An insurance premium is paid by the borrower on behalf
of the lender. The insurance premium that is paid to CMHC is to protect
the lender in the event that the mortgage is not paid. This is not
life, disability, or job loss insurance. The insurance premium is
calculated as a percentage of the mortgage amount, depending on the
loan to value, and may be added to the mortgage amount.
The entity who lends the money.
The entity who borrows the money.
Mortgage Term TOP
The actual length of time money is loaned at the contractual rate
of interest. Terms range from three months to twenty five years. Traditionaly
the longer the term the higher the rate.
Mortgage Types TOP
Open Mortgage TOP
Allows borrowers to repay a portion or the total amount of their mortgage
at any time without penalty. Ideal for those who plan to sell their
homes in the near future.
Closed Mortgage TOP
A good choice for those that want security in knowing their
monthly payments are fixed for a certain term. Lacks the option of
repaying the entire amount of the mortgage upon request.
Regulations under The Bank Act prohibit lenders from lending in excess
of 80% of the purchase price or the appraised value of a property
without obtaining Hi-Ratio Insurance. A loan for up to 80% of the
purchase price of a property is a conventional mortgage.
Convertible Mortgage TOP
A short term mortgage usually six or twelve months, allowing the borrower
to switch into a longer term at any time without penalty.
High Ratio Mortgage TOP
A loan for 80% to 95% of the purchase price of a property.
Rate Mortgage TOP
A mortgage where payments can be fixed from one to five years, but
the interest rate could change from month to month or quarterly depending
on market conditions. Payments and balance outstanding are adjusted
First Mortgage TOP
Mortgage given the first priority at the registry office. Can be conventional
or high ratio. They give borrowers the best rate of interest.
Second Mortgage TOP
A loan that provides borrowers with additional financing if
the first mortgage does not meet their total financial requirements.
Offer to Purchase TOP
A written contract setting forth the terms under which a buyer agrees
to purchase a property. Upon acceptance by the seller, it forms a
contract, which will form the basis for the final document to be prepared
by a lawyer or notary. It includes the legal and/or municipal description
(this may consist of lot numbers as well as street address), purchase
price, closing date, mortgage and terms of repayment, and lists specific
items included as part of the sale.
Principal, interest and taxes due on a mortgage.
Principal and interest due on a mortgage.
A sum of money paid to a lender for the privilege of prepaying a mortgage
in part or in full.
Power of Sale TOP
The right of a mortgagee to force the sale of the property without
judicial proceedings should default occur.
Prepayment Option TOP
The right to prepay a specified amount of the principal balance. Penalty
interest may be incurred on prepayment options.
Full or partial payment of all or part of the principal, separate
from the regular payments called for under a mortgage agreement.
The amount owing to the lender at any time.
Purchase Plus Plan TOP
The Purchase Plus Plan lets you add the cost of improvements to your
home onto your mortgage.
Rate (interest) TOP
The return the lender receives for loaning you the money for the mortgage.
Real Estate TOP
Includes real property, leasehold and business whether with or without
premises, fixtures, stock in trade, good of chattels in connection
with the operation of the business.
The accurate mathematical measurement of land and building there on.
Total Debt Service Ratio is a secondary calculation used by
lenders and mortgage insurers to determine an applicant's ability
to service their respective mortgage request in addition to their
other debt obligations. The calculation is determined as follows:
Mortgage, Principle Interest & Taxes
and/or Condo Fees
annual income of borrower(s)
Evidence of ownership.
Vendor Take Back TOP
Where the seller of a property provides some or all of the mortgage
financing in order to sell the property.
Zoning Laws TOP
Municipal laws restricting the use of land for special purposes.