Amortization Period
The actual number of years it will take to repay a mortgage loan in full. This can be well in excess of the loan's term. The standard amortization is 25 years and the maximum amortization period available in Canada is 40 years.

Appraised Value
The estimate of the value of the property offered as security for a mortgage loan. This appraisal is done for mortgage lending purposes and is determined by the Market Value Approach and/ or the Depreciated Cost Approach.

Assessment
The assessed vale of a property is a historical, static estimate of the value of the property used by Municipal Government as a basis for calculating property taxes.

Assumable Mortgage
A mortgage which a qualified buyer can take over from the current owner of a property upon its sale. Assuming a mortgage can provide a buyer with a below market interest rate, as well as saving legal costs of creating and registering a whole new mortgage.

CMHC- Canada Mortgage and Housing Corporation
A federal crown corporation which administers the “National Housing Act” (NHA), and through which all federal housing policies are implemented.

CMHC develops new ways to finance home purchases. They encourage innovation in housing design and technology. Their mortgage loan insurance helps Canadians realize their dream of owning a home.

Closing Date
The date in which the final exchange of consideration and legal completion of a transaction involving a home purchase, a mortgage registration, or both.

Closed Mortgage
A closed mortgage agreement does not provide for payout prior to maturity. A lender may permit payout under certain circumstances but will levy a penalty charge for doing so if such exceeds certain limits, if any, specified in the mortgage.

Conventional Mortgage
A mortgage loan which does not exceed 75% of the lesser of the appraised value or the purchase price of the property. A mortgage that exceeds that limit must be insured under the practices of most major financial institutions

Debt Service Ratios
The Gross Debt Service Ratio (GDSR) is the percentage of gross annual income required to cover payments associated with housing (mortgage principal and interest, taxes, secondary financing, heating, and 50% of condominium fees, if any). The GDSR should not exceed 32% of the gross annual income.

Down Payment
The amount of money (usually in the form of cash) put forward by the purchaser. It represents the difference between the purchase price and the amount of the mortgage loan. This is also known as the purchaser’s initial “equity” in the property.

Equity
Equity is the difference if positive between the price for which a property could be sold and the total debts registered against it.

Fixed Rate Mortgage
A fixed rate mortgage is one for which the rate of interest is fixed for a specific period of time (the term).

Genworth Mortgage Insurance Corporation
Canada’s only private mortgage insurer.

High Ratio Mortgage
A mortgage loan which exceeds 75% of the lesser of the appraised value or purchase price of the property. This mortgage must be insured and borrowers must pay an application fee and the insurance premium (which may be added to the mortgage) to the insurer.

Interest Adjustment Date
A date, usually one month before monthly mortgage payments begin, when interest on monies advanced before that date is calculated and must be paid by the borrower.

Loan to Value Ratio (LTV)
The ratio of the loan to the appraised value or purchase price of the property, whichever is less, expressed as a percentage.

Maturity Date
The last day of the term of the mortgage agreement. The mortgage agreement must then be renewed or the mortgage balance paid in full.

Mortgagee
The lender

Mortgagor
The borrower

Open Mortgage
An open mortgage allows you to pay back the borrowed funds without notice or penalty.

Portable Mortgage
A mortgage which allows you to transfer the amount and terms over to a new property without cost or penalty. The mortgage will have to be registered on title of the new property.

Prepayment Privileges
The right to repay more than the scheduled principal payment. In recent years, prepayment privileges have become more lenient, reflecting peoples’ desire to pay their mortgages off on an accelerated basis.

Refinance
To arrange a new mortgage for an increased amount. The old mortgage(s) is paid off (discharged) from the proceeds of the new loan. This type of loan is also referred to as equity take out.

Renew
To extend a mortgage agree-ment with the same lender for another term. The length of the term and the conditions (such as the rate of interest) may be changed.

Survey
The legal written and/ or mapped description of the location and dimensions of your land. The survey should also show the dimensions and placement of any structure, including additions such as sheds, pools and fences.

Switch
The process of changing Lenders at the end of a term when a mortgage becomes due or “open”.

Term
The length of time which a mortgage agreement covers. Payments made may not fully repay the outstanding principal by the end of the term, because the amortization period is longer

Title Insurance
Insurance offered by Title Companies to protect a landowner, and thus the mortgage lender against any legal questions on the title to the real estate, or of the legal propriety of the mortgage

Variable Rate Mortgage
A Variable Rate Mortgage is one for which the rate of interest changes as money market conditions change, usually not more than once a month. The monthly payment may fluctuate to account for any changes to the rate of interest.