Glossary

Accelerated Payments
This is an expression that is usually used when a person chooses to pay a mortgage on a weekly or a bi-weekly basis although it can apply to any repayment program.
All mortgages are drawn with a requirement that you make monthly payments, however, most lenders will usually agree to some other payment frequency. You can make bi-weekly or weekly accelerated payments.
Bi-weekly
You will pay one half of the monthly payment every two weeks. In essence, you are making one extra monthly payment per year, causing your mortgage to be paid off more quickly.
Weekly
You will pay one quarter of a monthly payment every week and get the same benefit.
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Amortization
The period of time it takes to pay off your mortgage in full. An Amortization can be as low as 5 years or high as 25, the most commonly chosen period.
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Appraisal
An Appraisal is a comprehensive report, complete with photographs of the home, produced by a professional appraiser indicating the market value of property.
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Assumable
If a mortgage is assumable, a buyer may take over the sellers’ existing mortgage. This may be advantageous to a buyer if the interest rate is below current market rates. However, approval must be obtained from the lender before the mortgage can be assumed.
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Blended Payment
A blended payment is a mortgage payment includes both principal and interest. The interest portion of the payment reduces while the principal amount increases, but the payment remains constant.
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Closed Mortgage
A closed mortgage may not be paid off during the term without penalty. Be aware that there are mortgages that cannot be paid off before the maturity date, even with the payment of a penalty.
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Closing Costs
Expenses that are payable on or before the possession date of the property. These costs may include appraisal, legal, survey costs, etc., as well costs specific to each province (e.g., land transfer tax in Manitoba).
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Commitment letter
This document is written notification from the lender that the mortgage has been approved. It will include the amount of the mortgage, interest rate, payment amount and frequency, as well all the terms and conditions of the mortgage.
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Conventional Mortgage
A conventional mortgage is any mortgage up to a maximum of 75% of the purchase price/appraised value.
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Gross Debt Service Ratio (GDS)
The percentage of gross income used to pay the mortgage payment (Principal & Interest - PI), including property taxes and heat (PITH). See Total Debt Service ratio (TDS).
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High Ratio Mortgage
A High Ratio Mortgage is any mortgage where the downpayment is less than 25% of the purchase price. This type of mortgage must be insured against default by an outside company, namely CMHC & Genworth.
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Interest Adjustment Date
The date from which the lender will start collecting interest. Your regular payments will start one payment period after this date. For example, if you will be making bi-weekly payments, your first payment will be two weeks after the Interest Adjustment Date. Your lawyer will collect an “Interest Adjustment” amount from you. This is the amount of interest from the Possession Date to the Interest Adjustment Date.
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Loan to Value Ratio (LTV)
The amount of the mortgage as a percentage of the value of the home. For example, if you want to borrow $150,000 on a home with a value of $300,000, the Loan to Value Ratio is 50%.
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Maturity Date
The last day of the term of your current mortgage. On the Maturity Date the mortgage you have three options. It must be paid in full, renewed with the same lender or transferred to a new lender.
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Mortgage
A mortgage is the document that is registered in Land Titles Office. It evidences that you gave your home as collateral to a lender to secure a loan.
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Mortgagee
The lender who provides a loan secured by a real property mortgage.
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Mortgagor
A person who takes out a loan which is secured by a real property mortgage.
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Net Worth
The difference between what you own (assets) and what you owe (liabilities).
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Open Mortgage
An open mortgage will usually have a higher interest rate than a closed mortgage, but allows you to repay the mortgage in full or in part at any time without penalty.
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Portable
A portable mortgage can be transferred from one property to another.
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Prepayment Penalty
Closed mortgages (see above) may not be paid off before the Maturity Date without paying a Penalty. Prepayment Penalties, as a rule are the greater of 3 months interest or the Interest Differential (the amount of interest at the mortgage rate vs. the current interest rate due for the balance of the term).
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Prepayment Privilege
Most mortgages allow prepayment privileges such as an annual prepayment of a percentage of the mortgage amount or an annual increase in the mortgage payment.
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Principal
The amount of money actually borrowed.
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Real Property
Land and any improvements permanently affixed to it, such as buildings.
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Survey
A Survey is shows the location of buildings relative to the property boundaries.
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Term
The length of time that the lender guarantees the interest rate. The mortgage must be re-negotiated at the end of the term.
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Total Debt Service Ratio
The percentage of gross income used to pay the mortgage payment (Principal & Interest - PI), including property taxes and heat (PITH) and all other debt payments such as credit cards and loans. See Gross Debt Service ratio (GDS).
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The Mortgage Centre (Total Mortgage & Credit Services): Winnipeg MB, Canada
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