GLOSSARY
<< Mortgage Terms A-L Mortgage Terms M-Z
<< Mortgage Terms A-L Mortgage Terms M-Z
M
Maturity Date – The agreed upon end date of the term of the mortgage agreement.
Mortgage Blog - A site dedicated to mortgages consisting of informational posts in reverse chronological order. It is used for educational or discussion purposes.
Mortgage Application Form - The initial document needed to start a mortgage loan approval. It contains the borrowers information.
Mortgage Broker - A mortgage Broker is employed by a Mortgage Brokerage to oversee the Mortgage Agents and brokerage employees. Brokers have a mostly management role within a brokerage. They are also tasked to make sure the brokerage complies with the Real Estate Act.
Mortgage Calculator – A broad definition of a set of tools including the Mortgage Affordability Calculator, Mortgage Payment Calculator and others that are essential in helping you in the “numbers” part of your mortgage transaction.
Mortgagee - The person or entity who provides the funds in the mortgage transaction, or the lender.
Mortgagor – The person who takes out the mortgage, or the borrower.
Mortgage Insurance – Not to be confused with Mortgage Life Insurance, Mortgage insurance insures the lender against loss in case of default by the borrower. Mortgage insurance is provided to the lender by CMHC or GEMICO and the premium is paid by the borrower.
Mortgage Lender - A mortgage lender is an entity that provides financing for the purchase of real estate, Refinancing, or Home Equity Line of Credit.
Mortgage Life Insurance - A form of reducing term insurance recommended for all mortgagors. If you die, have a terminal illness, or suffer an accident, the insurance can pay the balance owing on the mortgage. The intent is to protect survivors from the loss of their homes. It is not the same as Mortgage Insurance.
Mortgage Rate - A interest on the mortgage loan that is charged by the lender for the privilege of using lender’s money. Canada mortgage rates are compounded twice a year, or semi-annually.
Mortgage Renewal – The acceptance of new terms and conditions of both the lender and the borrower at the end of a mortgage term. These may include a new term or a different interest rate. It the lender offers the terms and the borrower accepts, then the mortgage is renewed. Otherwise, the lender is entitled and may demand to be repaid in full, in which case the borrower may seek alternative financing.
Mortgage Term - The amount of time agreed upon over which you pay regular mortgage payments. The mortgage term usually depends on the type of mortgage and can range from six months to 10 years.
O
Open Mortgage - A mortgage which can be paid in full at any time, without penalty or additional fees.
P
Payment Frequency - The specified time period on which your regular mortgage payment need to be paid. This could be weekly, bi-weekly, bi-monthly, or monthly.
P.I.T. - Principal, interest and taxes. When combined, this amount is the regular payment on a mortgage. Sometimes lenders allow the borrowers to pay taxes on their own, but the amount is still accounted for in the Debt Ratios.
Porting – Transferring your existing mortgage to a different property. This allows you keep your existing mortgage balance, term and interest rate. It can also save you money in pre-payment and discharge penalties.
Prepayment Penalty – An amount of money charged to the borrower when they prepay all or part of a closed mortgage more quickly than the allowed prepayment privilege amount as set out in the terms of the mortgage.
Prepayment Option – An option that may be exercised that allows the mortgagor to prepay the principal balance or a portion thereof. Prepayment penalties may be incurred when this option is used.
Principal - The actual amount of money lent out by the lender and borrowed for a mortgage.
R
Refinancing - Replacing your existing mortgage or renegotiating your existing mortgage agreement.
Reverse Mortgage - A type of Canadian mortgage that is designed for homeowners who are 55 years or older.
S
Second Mortgage - A mortgage product that goes behind a first mortgage and whose holder has the second place claim on assets in the event of a default.
Security – Collateral offered for a loan. In mortgages, it is usually the property being purchased or the home being refinanced.
Survey – Also called a Certificate of Location, it is the document that shows the exact location of the building on the property and describes the type, size and specifications of the building including any additions.
T
Term - The length of a mortgage agreement. Not to be confused with Amortization Period, which is usually longer(25-35 years), The term is the amount of time agreed upon over which you pay regular mortgage payments. After the term expires, the balance of the principal has to be either renewed or refinanced.
Total Debt Service Ratio – Also called TDS. In addition to the payments already considered in the Gross Debt Service, or GDS, The Total Debt Service also accounts for all other debts and financing obligations. The total TDS allowed can be 40%-44% of gross monthly income depending on the applicants credit score.
V
Variable Rate Mortgage - A mortgage product that has fixed payments, but whose principal portion of the payment fluctuates with interest rate changes. Variable rate mortgages generally fluctuate in coordination with the prime lending rate.
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