A

Abandonment of Property
To vacate a property with a definite intention never to return.

Abstract of Title
Registry System: A condensed history of the title to a parcel of land. The abstract consists of a synopsis of every recorded instrument affecting the title to that land arranged in chronological order of recording.

Accelerated Weekly Payment
A mortgage repayment plan in which the borrower makes 52 payments per year instead of 48 which would be required if the payment plan called for four payments per month. The extra four payments each year have the effect of “accelerating” the repayment of the mortgage.

Acceleration Clause
A clause in a mortgage which provides that where default has occurred in making any mortgage payment, the outstanding mortgage amount becomes due.

Acceptance
The offeree’s consent to enter into a contract and to be bound by the terms of the offer.

Accredited Appraiser Canadian Institute (AACI)
The highest level of designation bestowed by the Appraisal Institute of Canada. It allows the holder to conduct appraisals and consultations on various types of property.

Accredited Mortgage Professional (AMP)
AMP is Canada’s only national designation for mortgage professionals. The AMP designation sets a single national proficiency standard for Canada’s mortgage professionals and is issued by the Canadian Association of Accredited Mortgage Professionals (CAAMP).

Accrued Interest
The interest charged for the period of time that has elapsed since the last interest date.

Action for Possession
A legal remedy available to a lender when a mortgage is in default. It allows the lender to take possession of the mortgage property.

Action of Receiver
A legal remedy available to a lender when a mortgage is in default, asking the courts to appoint a receiver who takes possession of the property

Action on the Covenant for Payment
A legal remedy available to a lender when a mortgage is in default. It gives the lender the right to sue the borrower, even if the borrower has since sold the property.

Acquittance
The term for a discharge of mortgage in Québec.

Adjustment on Sale
A pro-rated division and distribution of prepaid or accrued taxes, prepaid insurance premiums, prepaid rents and other income and expenses. This adjustment usually occurs when a property is sold and is the manner of determining the amounts due to and from the parties.

Adverse Possession
The right by which someone occupying a piece of land might acquire title against the real owner, if the occupant’s possession has been actual, continuous, hostile, visible, and distinct for a statutory period. Adverse possession is not possible under Land Titles or when Crown property is involved.

Advertising Standards Canada (ASC)
Advertising Standards Canada (ASC) is the Canadian advertising industry’s self-regulatory body. ASC’s mission is to ensure the integrity and viability of advertising. They administer The Canadian Code of Advertising Standards.

Affidavit
A statement or declaration in writing and sworn to or affirmed before some officer who is authorized to administer an oath or affirmation, such as a notary public, or commissioner of oaths.

Agency
An agency relationship is created when one person, called the principal, authorizes another person, called the agent, to act on behalf of and subject to the control of the principal.

Agent
One who is authorized to represent and act on behalf of another person or business, the principal in transactions involving a third party. Unlike an employee who merely works for the principal, an agent works in place of the principal.

Agreement of Purchase and Sale
A written agreement between vendor and purchaser in which the purchaser agrees to buy certain real property and the vendor agrees to sell upon terms and conditions as set out in that agreement.

Alienation Clause
A type of acceleration clause that demands payment of the entire debt upon sale or other transfer of the title.

Amending Agreement
An agreement between the lender and borrower by the lender in which the terms of the registered mortgage are changed. The amending agreement may or may not be not be registered on title.

Amortization
This refers to the process of paying off a mortgage in regular payments composed of both interest and principal.

Amortization Period
The time over which the mortgage is to be completely repaid, assuming equal payments. This means that when looking, for example, at a mortgage with a 25-year amortization period, it would take 25 years to reduce the balance to zero, if all regular payments were made on time and the terms (payment, interest rate) remained the same.

Amortization Schedule
A table showing the amounts of principal and interest which make up each of the periodic level payments and the outstanding principal balance of the loan after each level payment is made.

Amortized Mortgage
A mortgage requiring regular payments which include both principal and interest sufficient to fully repay the loan by maturity.

Anniversary Date
The same date in each calendar year during the term of the mortgage. The first anniversary date occurs one year from the date interest is adjusted and the periodic repayments begin.

Appointment of a Receiver
A legal remedy available to a lender when a mortgage is in default. The receiver takes possession of the property, collects rents, and pays any expenses as required.

Appraisal
An independent, unbiased report that uses various analysis techniques and market research to determine the realistic value of a property.

Appraisal Report
An independent assessment of a property by a qualified individual. A statement giving an opinion of value of an adequately described property, as at a specific date and supported by pertinent data.

Appraiser
An appraiser determines the market value of a house based on its condition and the selling price of comparable houses recently sold in the area. The licensing requirement for real estate appraisers varies from province to province.

Arm’s Length Transaction
A transaction between unrelated parties. A transaction freely arrived at in the open market unaffected by abnormal pressures as might be the case in a transaction between related parties.

Arbitration
The determination of a dispute by a disinterested third party.

Arrears
An overdue payment (in reference to a mortgage for the purposes of this text).

Assessment (assessed value)
A value placed upon property (land and buildings) for taxation purposes.

Assessment Roll
An annual list of the assessed values of all properties in a municipality. The assessment roll includes the name of the property owners or tenants and their addresses. Assessment rolls are usually delivered to a municipality before the end of the year. The term “roll” comes from ancient times and refers to the way information used to be stored – on paper or parchment, rolled up into cylinders.

Assets
Goods of value, either tangible or not, that a borrower or business owns.

Assignee
One who takes the rights or title of another by assignment.

Assignment
The act of transferring rights held by one party, the assignor, to another party, the assignee.

Assignment of Lease
The absolute or conditional transfer of the rights of either party to a lease.

Assignment of Mortgage
The transfer of ownership of a mortgage from one party to another.

Assignment of Rentals
A contract in which the borrower grants the lender the right to collect future rents on a given occurrence, normally default. This assignment is normally taken as additional security on rental loans.

Assignor
One who transfers or assigns the rights or title to another.

Assumable Mortgage
An existing mortgage that can be taken over (assumed) by the buyer of a property when that property is sold.

Assumption of Mortgage
The act of assuming liability for an existing mortgage on a property by the purchaser of that property. With builders’ loans, the assumption is usually evidenced by written agreement.

Attachment
The seizure of property by court order.

Attornment of Rents
A legal action available upon default of a mortgage. As a result, tenants are directed to pay their rents to the lender.

Automated Valuation Models (AVM)
Computer programs that provide real estate market analysis and estimates of value based on specific attributes of a property as well as sales information.

B

C

Canada Mortgage and Housing Corporation (CMHC)
CMHC is a federal Crown corporation that administers the National Housing Act (NHA). Among other services, they also insure mortgages for lenders that are greater than 75% of the purchase price or value of the home. The cost of that insurance is paid for by the borrower and is generally added to the mortgage amount. These mortgages are often referred to as “Hi-Ratio” mortgages.

Closed Mortgage
Rate guarantee for full term of Mortgage.

Closing Date
The date on which you become t.

Conventional Mortgage
A mortgage up to 75% of the purchase price or the value of the property. A mortgage exceeding 75% is referred to as a “Hi-Ratio” mortgage and the lender will require insurance for that mortgage.

Credit Scoring
A system that assesses a borrower on a number of items, assigning points that are used to determine the borrower’s credit worthiness.

D

Demand Loan
A loan where the balance must be repaid upon request.

Deposit
A sum of money deposited in trust by the purchaser

E

Equity
The difference between the market value of the property and any outstanding mortgages registered against the property.

F

First Mortgage
A debt registered against a property that has first claim on that property.

Fixed-Rate Mortgage
A mortgage for which the interest is set for the term of the mortgage.

G

Gross Debt Service (GDS.) Ratio
It is one of the mathematical calculations used by lenders to determine a borrower’s capacity to repay a mortgage. It takes into account the mortgage payments, property taxes, approximate heating costs, and 50% of any maintenance fees, and this sum is then divided by the gross income of the applicants. Ratios up to 32 % are acceptable.

Guarantor
A person with an established credit rating and sufficient earnings who guarantees to repay the loan for the borrower if the borrower does not.

H

Hi-Ratio Mortgage
A mortgage that exceeds 75% of the purchase price or appraised value of the property. This type of mortgage must be insured. This is Hi-Ratio Mortgage.

Home Equity Line of Credit
A personal line of credit secured against the borrower’s property.

I

Interest Adjustment Date (IAD)
The date on which the mortgage term will begin. This date is usually the first day of the month following the closing. The interest cost for those days from the closing date to the first of the month are usually paid at closing. That is why it is always better to close your deal towards the end of the month.

Interest-Only Mortgage
A mortgage on which only the monthly interest cost is paid each month. The full principal remains outstanding. The payment is lower than an amortized mortgage since once is not paying any principal.

M

Mortgage
A mortgage is a loan that registers against the real estate as a security.

Mortgagee
The financial institution or person (lender) who is lending the money using for a mortgage.

Mortgagor
The person who borrows the money using for a mortgage.

O

Open Mortgage
A mortgage that can be repaid at any time during the term without any penalty.

P

P.I.T.
Principal, interest, and property tax due on a mortgage.

Portable Mortgage
An existing mortgage that can be transferred to a new property. One would want to port their mortgage in order to avoid any penalties.

Prime
The lowest rate a financial institution charges its best customers.

Prepayment Penalty
A fee charged a borrower by the lender when the borrower prepays all or part of a mortgage over and above the amount agreed upon.

Principal
The original amount of a loan, before interest.

R

Rate Commitment
The number of days the lender will guarantee the mortgage rate on a mortgage approval.

Renewal
When the mortgage term has concluded, your mortgage is up for renewal. It is open at this time for prepayment in part or in full.

S

Second Mortgage
A debt registered against a property that is secured by a second charge on the property.

Switch
To transfer an existing mortgage from one financial institution to another. We can have this arranged for you at no cost to you.

T

Term
The period of time the financing agreement covers. The terms available are: 6 month, 1,2,3,4,5,6,7,10 year terms, and the interest rates will be fixed for whatever term once chooses.

Total Debt Service (TDS) Ratio
It is the other mathematical calculations used by lenders to determine a borrower’s capacity to repay a mortgage. It takes into account the mortgage payments, property taxes, approximate heating costs, and 50% of any maintenance fees, and any other monthly obligations (i.e. personal loans, car payments, lines of credit, credit card debts, other mortgages, etc.), and this sum is then divided by the gross income of the applicants. Ratios up to 40 % are acceptable.

V

Variable-Rate Mortgage
A mortgage for which the interest rate fluctuates based on changes in prime.

Vendor Take Back (VTB) mortgage
A mortgage provided by the vendor (seller) to the buyer.