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If what you're looking for is not here,
check out the Frequently Asked Questions page.
Agreement of Purchase and Sale TOP
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A contract by which one party
agrees to sell and another agrees to purchase. |
Amortization TOP
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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.
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Appraisal TOP
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Process by which the mortgage
lending value of a property is determined. |
Bridge Financing TOP
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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
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An intermediary between the buyer
and seller who is licensed to carry out such activities. |
Building Permit TOP
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A certificate that must be obtained
from the municipality by the property owner or contractor before a building can
be erected or renovated. |
Closing Date TOP
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The date of which the sale of the
property becomes final and the new owner takes possession. |
Commitment TOP
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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
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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
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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
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A mortgage loan of up to a maximum
of 75% of the lending value of the property for which a lender does not require
loan insurance. |
Bridge Financing TOP
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The percentage of the
borrower’s income that will be used for monthly payments. |
Default TOP
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Non-payment of installments due
under the terms of the mortgage. |
Deposit TOP
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Payment of money or other valuables
in consideration as a pledge for fulfillment of the contract. |
Discharge TOP
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The removal of all mortgages and
financial encumbrances on the property. |
Easement: TOP
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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
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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 and can not exceed 32% of your gross
income: |
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Mortgage Principal and
Interest
+ 1/12 Taxes
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+ Heating Cost
+ and/or 1/2 Condo Fees |
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Divided by gross monthly income
of borrower(s) |
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Equals GROSS
DEBT SERVICE |
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High Ratio Mortgage TOP
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Loan that exceeds 75% of the
property’s lending value, and which is insured through a mortgage
insurance plan. |
Hold-back TOP
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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.
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LTT TOP
Mortgage Insurance Premium TOP
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A premium which is added to the
mortgage and paid by the borrower over the life of the mortgage. The mortgage
insurance insures the lender against loss in case of default on the part of
the borrower. |
Mortgage
Life Insurance TOP
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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
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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 premiums are as follows: |
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Loan to
Value Premium |
| 75.1 -
80% |
1.25% |
| 80.1 - 85% |
2.00% |
| 85.1 - 90% |
2.50% |
| 90.1 - 95% |
3.75% |
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| Other high ratio
financing costs include an appraisal of $235.00 plus 8% PST on the
insurance premium. |
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Mortgagee TOP
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The entity who
lends the money. |
Mortgagor TOP
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The entity who
borrows the money. |
Mortgage Term TOP
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The actual length of time money is
loaned at the contractual rate of interest. Terms range from three months to
twenty five years. Traditionally the longer the term the
higher the rate. |
MORTGAGE TYPES
Open Mortgage TOP
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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
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The most common mortgage is 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. The lender will normally allow a prepayment of 10%
to 15% annually. |
Conventional Mortgage TOP
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Regulations under The Bank Act
prohibit lenders from lending in excess of 75% of the purchase price or the
appraised value of a property without obtaining Hi-Ratio Insurance. A loan for
up to 75% of the purchase price of a property is a
conventional mortgage. |
Convertible Mortgage TOP
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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
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A loan for 75% to 95% of the
purchase price of a property. |
Variable Rate Mortgage TOP
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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
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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
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Mortgage given the second priority
at the registry office. Normally at a higher rate of interest, provides the
borrower with additional financing if the first mortgage does not meet their
total financial requirements. |
OHOSP TOP
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Ontario Home Ownership Savings
Plan. |
Offer to Purchase TOP
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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. |
PI&T TOP
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Principal, interest and taxes due
on a mortgage. |
P&I TOP
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Principal and interest due
on a mortgage. |
Penalty TOP
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A sum of money paid to a lender for
the privilege of prepaying a mortgage in part or in full.
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Power of Sale TOP
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The right of a mortgagee to force
the sale of the property without judicial proceedings should
default occur. |
Prepayment Option TOP
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The right to prepay a specified
amount of the principal balance. Penalty interest may be incurred on
prepayment options. |
Prepayment TOP
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Full or partial payment of all or
part of the principal, separate from the regular payments called for under a
mortgage agreement. |
Principal TOP
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The amount owing to the lender
at any time. |
Purchase Plus Plan TOP
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The Purchase Plus Plan lets you add
the cost of improvements to your home onto your mortgage. |
Rate (interest) TOP
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The return the lender receives for
loaning you the money for the mortgage. |
Real Estate TOP
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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. |
Roll-Over Mortgage TOP
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A mortgage loan where the interest
rate is established for a specific term. At the end of this term, the mortgage
is said to "roll-over" and the borrower and lender may agree to
extend the loan. If satisfactory terms cannot be agreed upon, the lender is
entitled to be repaid in full. In this case, the borrower may seek
alternative financing. |
Sales Representative TOP
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A licensed employee of a Real
Estate Broker authorized to trade in real estate. |
Survey TOP
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The accurate mathematical
measurement of land and building there on. |
TDSR TOP
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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 and
cannot exceed 40% of gross income: |
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Mortgage
Principal & Interest
+ 1/12 Annual Taxes |
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+
Heat and/or 1/2 Condo Fees |
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+ All
Additional Debt Payments |
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Divided by Gross Monthly Income of
borrowers |
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Equals the
TOTAL DEBT SERVICE |
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Term TOP
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The length of time which you pay a
specific interest rate on your mortgage loan. At the end of the term you may
repay the balance of the loan or re-negotiate at current rates
and conditions. |
Title TOP
Vendor Take Back TOP
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Where the seller of a property
provides some or all of the mortgage financing in order to sell
the property. |
Zoning Laws TOP
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Municipal laws restricting the use
of land for special purposes. |
Got A Question?
info@ndlc.ca
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