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Agreement of Purchase and Sale   TOP
A contract by which one party agrees to sell and another agrees to purchase.

Amortization  TOP
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.

Appraisal  TOP
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.

Broker  TOP
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.

Commitment  TOP
A notice from a mortgage lender to a prospective borrower that the lender will advance mortgage funds of a specified amount under certain conditions.

Condition  TOP
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.

Conventional Mortgage  TOP
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.

Default  TOP
Non-payment of installments due under the terms of the mortgage.

Deposit  TOP
Payment of money or other valuables in consideration as a pledge for fulfillment of the contract.

Discharge TOP
The removal of all mortgages and financial encumbrances on the property.

Easement:   TOP
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.

GDSR  TOP

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 as follows:

Mortgage Principle, Interest & Taxes

+            Heating Cost
              and/or 1/2 of Condo Fees

Gross 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.

Hold-back  TOP
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.

LTT  TOP
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 Ratio) TOP
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.

Mortgagee  TOP
The entity who lends the money.

Mortgagor  TOP
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.

Conventional Mortgage  TOP
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.

Variable 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 accordingly.

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.

P&I&T  TOP
Principal, interest and taxes due on a mortgage.

P&I  TOP
Principal and interest due on a mortgage.

Penalty TOP
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.

Prepayment  TOP
Full or partial payment of all or part of the principal, separate from the regular payments called for under a mortgage agreement.

Principal  TOP
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.

Survey  TOP
The accurate mathematical measurement of land and building there on.

TDSR  TOP
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

+                     Heating Cost
                       and/or Condo Fees

+                     All Other Debts

Gross annual income of borrower(s)

Title  TOP
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.

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