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Glossary of Terms

  • Amortization
    The length of time it takes to pay off your mortgage by equal installment or periodic constant payments.
  • Adjustment Date
    The date that is the official beginning of a mortgage.
  • Appraisal
    An estimate of value, market value, or value for loan purposes, or as described by the appraiser of an adequately described property as of a specific date.
  • Assessed Value
    A dollar amount assigned to taxable property.
  • Blended Payments
    Method of repayment where periodic payments of principle and interest are made so that the payments remain constant in amount, although the portions attributed to principle and interest will vary with each payment as the time elapses in the amortization periods.
  • Bridge Loans
    Used to bridge the gap between the initial construction and the first advances available under the terms of the construction mortgage.
  • Builder Loans
    A builder's loan is granted to an individual or a builder to build a house or project. Usually, there is a mortgage arranged which will be funded as the house or project progresses.
  • Closed Mortgage
    The restriction and denial of repayment rights until the maturity of the mortgage.
  • CMHC
    Canada Mortgage and Housing Corporation is a Crown Corporation which provides mortgage insurance to lenders that grant high ration loans.
  • Compound Interest
    Interest charged not only to the principle sum but also on the interest amounts.
  • Conventional Mortgage
    A first mortgage, in which the amount of the loan does not usually exceed 75% of the appraised lending value of the property.
  • Covenant
    An agreement creating an obligation, contained in a deed, mortgage or other instrument.
  • Disclosure Statement
    A statement contained in a consumer credit transaction in order to disclose complete credit terms and interest rates.
  • Easement
    A right given to someone to use the lands of another. Common forms are sewage and gas lines.
  • Encumbrance
    Outstanding claim or lien recorded against the property.
  • First Mortgage
    A first charge on a property which ranks ahead of any other mortgages or encumbrance.
  • Gross Debt Service Ratio(GDSR)
    The ratio of the borrowers annual income relative to annual mortgage payments, property taxes, condo fees (if applicable) and allowance for hear (on CMHC loans); most lenders prefer this to be not more than 32%.
  • High-Ratio Mortgage
    Usually a mortgage that exceeds 75% of the value of the property.
  • Interest
    The rate of charge of borrowing money.
  • Loan-to-Value Ratio(LVR)
    The amount of the mortgage relative to the value of the property.
  • Maturity Date
    The final day on the term of the mortgage.
  • Mortgage Broker
    An intermediary who matches the needs of a borrower with the requirements of a lender.
  • Mortgagee
    The lender.
  • Mortgagor
    The borrower; the owner of the property.
  • Open Mortgage
    A mortgage that can be repaid prior to the term due date.
  • Prepayment Clause
    A clause inserted in a mortgage which gives the mortgagor the privilege of paying off all or part of the mortgage debt ahead of the maturity date.
  • Term(If Loan)
    The "actual" length of time for which the money is borrowed. At the end of each term the loan may be renegotiated as to the interest rate, payments, and the amortization period.
  • Title
    The means of evidence by which the owner of land has lawful ownership.
  • Total Debt Service Ratio(TDSR)
    The total annual income relative to a borrower's total payments, GDS payments plus other debts such as bank loans, finance company loans, credit card payments, car payments, etc; most lenders prefer this not to exceeds 42%.
  • Vendor Take-Back Mortgage
    A mortgage which the vendor or seller of the property takes back or carries for the buyer as part of the purchase price for that property.
  • Wrap Mortgage
    A special arrangement by which one document encompasses one or even more, already existing mortgages registered on the same property. The mortgagee is responsible for making these payments, while the mortgagor makes just one payment to the mortgagee.
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