50-50 Mortgage
A 50–50 mortgage, also known as a hybrid mortgage, is a mortgage combining the features of a fixed rate mortgage with the features of a variable rate mortgage.


When the condition of ownership for a property becomes a burden or is troublesome to the owner, he or she may choose to become a nonpayer and abandon the property. In the event of “abandonment,” creditors can seek to recover their money as the property is no longer part of the estate.

Accelerated Bi-weekly payments
Mortgage payments that are made every two weeks (the date of which won’t always fall on the first day of a month). If you choose accelerated bi-weekly payments, you will make 26 payments a year.

Accredited Mortgage Professional
Accredited Mortgage Professional (or AMP) is a professional designation created the by Canadian Association of Accredited Mortgage Professionals. It essentially a designation that demonstrates commitment to ongoing education and ethical behavior in the mortgage industry.

Property taxes and/or utility bills and condominium common expenses, if any, that have been prepaid by the vendor are pro-rated and paid by the purchaser to the vendor on closing.

Adjustable rate mortgage
Also known as an ARM, this is a mortgage where the payments change and the interest rate is periodically adjusted based on an index (in Canada, the index is the prime lending rate).

Adjustment date
An adjustment date, or interest adjustment date, is the date in which the interest will begin to accrue on your mortgage, before payment is made on the mortgage.

Agreement of Purchase and Sale

A legal agreement that offers a certain price for a home. The offer may be firm (no conditions attached), or conditional (certain conditions must be fulfilled before the deal can be closed).

Amortization Period
Number of years it takes to repay the entire amount of the mortgage.

Amortization schedule
An amortization schedule is a table of periodic payments made to a mortgage, showing the amount paid, the amount applied to interest, the amount applied to principal and the remaining balance after the payment is made.

Anniversary Period
Your anniversary period is the 12 month period that starts each year on your mortgage interest adjustment date or, if you have renewed or amended your mortgage, the effective date of your renewal or amendment.

A process undertaken by an independent appraiser hired by the bank to determine the value of the property and whether it meets lending criteria. This value may or may not match the purchase price of the home.

Appraised value
Appraised value is the fair market value of a piece of property as determined by a licensed and qualified appraise.

Articles of Incorporation
A document filed with the Government by a corporation’s founders describing the purpose, name, place of business, and other details of the corporation. These will frequently include a certificate of incorporation as well.

Something that you own that has value or use. Example: RRSPs, vehicle, savings, home, etc.

Assuming a mortgage
Taking over the obligations of the previous owner’s (or builder’s) mortgage when you buy a property.

Appraisal Value
An estimate of the market value of the property.

A firm price given to obtain a contract to perform a specific project, which usually includes detailed specifications of the quantity and quality of materials to be used, and notes any exclusions.

Blended Payments
Equal payments consisting of both a principal and an interest component, paid each month during the term of the mortgage. The principal portion increases each month while the interest portion decreases. The monthly payment does not change during the term.

Breakage Costs
A sum of money paid to compensate the lender for the prepayment of a closed mortgage in part or in full prior to maturity of the term.

Bridge Loan
Also known as interim financing, a bridge loan is a second mortgage that is paid of immediately following the closing date of the buyer’s current home. Bridge financing is typically used when the sale of the buyer’s current home closes after the purchase of his or her new home closes.

Buy Down rate
The portion of the interest rate on a buyer’s mortgage that you assume when they buy your home. If you’re selling your home and the prospective buyer doesn’t like the interest rate on their mortgage, you can offer to add a certain percentage of it onto your existing mortgage. You can add a maximum of 3%.

Canada Mortgage and Housing Corporation (CMHC)
The National Housing Act (NHA) authorized Canada Mortgage and Housing Corporation (CMHC) to operate a Mortgage Insurance Fund which protects NHA Approved Lenders from losses resulting from borrower default.

Certificate of Search or Abstract of Title
A document setting out instruments registered against the title to the property, e.g. deed, mortgages, etc.

Certificate of Location
A document prepared by a qualified surveyor specifying the exact size and location of the property and describing the type and size of the building(s), including additions, and the exact location of the building(s) on the property.

Closed Mortgage
A mortgage which cannot be prepaid, renegotiated or refinanced prior to the expiry of the term, except with compensation or breakage costs.

Closing Costs
Costs which are payable when the sale is closed. Standard closing costs include adjustments for prepayments of taxes, utilities and condominium common expenses, if any, made by the vendor; property land transfer taxes; property insurance; and legal/notarial fees.

Closing Date
The date on which the sale of a property becomes final and the new owner usually takes possession.

CMHC or GEMICO Insurance Premium
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.

A security or guarantee pledged for the repayment of a loan if an individual does not have enough funds to repay. In respect to mortgage loans, the collateral is the property being mortgaged.

Completion Certificate
A document signed by you acknowledging that the work has been completed to your satisfaction and releasing the contractor from any further responsibility.

Compound Period
The number of times per year that the interest rate is compounded. In Canada, mortgage interest rates are compounded semi-annually, or twice per year.

Condo Fee
Condo fees consist of the monthly payments collected that cover a resident’s shared expenses for the upkeep of all common areas.

Conditional Offer
An offer to purchase subject to specified conditions. These conditions could include the arranging of satisfactory mortgage financing, a satisfactory inspection or the selling of a present home. A time limit in which the specified conditions must be met should be stipulated in the offer to purchase.

Conventional Mortgage
A first mortgage — the principal amount of which cannot exceed 80% of the lesser of the appraised value of the property or the purchase price for the property.

An individual responsible for having all the work described in the contract carried out. The contractor is responsible for having the appropriate insurances, for paying the suppliers and workers, and for supervising the quality of all work performed.

Convertible Mortgage
A fixed-rate mortgage which offers the same security as a closed mortgage, but which can be converted to a longer, closed mortgage at any time without penalty.

A form of ownership in which the owner has title to a dwelling unit and owns a share of the common elements (such as elevators, hallways and the land).

Credit Report
A credit report is a report/history of an individual’s credit.

Credit Score
A credit score is a grade given to your credit situation and credit history.

Debt-Service Ratio
The percentage of the borrower’s gross income that will be used for monthly payments of principal, interest, taxes, heating costs and condominium fees.

Debt Consolidation
Debt consolidation is a means of combining several debts into one debt that has one monthly payment.

The document prepared by a lawyer or notary containing a detailed description of the property which transfers ownership from the vendor to the purchaser. This document is then registered against the title to the property as evidence of ownership.

Non-payment by the borrower of installments due under the loan agreement as they become due, or failure to fulfil any other term or condition of the agreement.

A sum of money paid by the purchaser on making an offer. Usually held in trust by the real estate broker or the vendor’s lawyer or notary until the closing of the sale.

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.

The right acquired for access to or over another person’s property for a specific purpose, such as for a driveway or public utilities. This is referred to as “servitude” in the Province of Quebec.

The interest the owner holds in a property over and above all claims to the property. It is usually the difference between any outstanding mortgages and the market value of the property.

Equity Loan
An equity loan is a loan secured by real estate.

A statement of what a job will cost, made by a person or company willing and able to perform the work. A proper estimate should be made in writing and may outline some or all of the terms and conditions that apply. An estimate is less detailed and therefore less reliable than a quote or bid.

Fair Market Value
Fair market value (FMV) is defined as the price a ready, willing and able buyer, with knowledge of all pertinent facts, is willing to pay for a certain piece of property.

Fire and Property Insurance
Before closing date, the purchaser must have fire and property insurance arranged and in effect. Evidence of the insurance is required by the mortgage lender prior to advancing mortgage funds.

Firm Offer
An offer to buy the property as outlined in the offer to purchase with no conditions attached.

First Mortgage
The mortgage whose holder has the first place claim on assets in the event of default.

Fixed-rate Mortgage
The interest rate on a fixed-rate mortgage is set for a pre-determined term – usually between 6 months and 25 years – and cannot be renegotiated, except upon payment of breakage costs. Interest is calculated semi-annually, not in advance.

A legal procedure whereby the lender obtains ownership of the property following default by the borrower by terminating all of the borrower’s rights in the property covered by the mortgage.

Genworth Financial Canada, a private mortgage default insurance provide.

Gift Letter
This is a letter stating that the gift giver (an immediate family member) in making a gift of a certain amount to the gift receiver for the down payment of a home. It also states that the gift is genuine and that the gift receiver (or home buyer) is not required to pay back the gift at any time.

Gross Debt Service Ratio
The percentage of the borrower’s gross income that will be used for monthly payments of principal, interest, taxes, heating and condominium fees.

Gross Household Income
Gross household income is the total salary, wages, commissions and other assured income, before deductions, by all household members who are co-applicants for the mortgage.

A HELOC is an acronym standing for Home Equity Line of Credit.

High Ratio Mortgage
If you don’t have 20% of the lesser of the purchase price or appraised value of the property, your mortgage must be insured against payment default by a Mortgage Insurer, such as CMHC.

A portion of each payment that remains unpaid until such time as the job is completed to your satisfaction and/or any liens placed against your property by the contractor’s debtors are discharged.

Home Equity
The difference between the price for which a home could be sold (market value) and the total debts registered against it.

Home Insurance
Home insurance provides payment to the homeowner in the event of loss due to fire, theft, or damage through certain natural elements such as hail, tornado, lightning and flooding.

High Yield Mortgage
A high yield mortgage is a mortgage with a higher than average interest rate. The yield refers to the compound interest charged on the mortgage, also known as the Annual Percentage Rate (APR).

The examination of the house for structural and other defects by an expert selected by the buyer.

Interest Rate
The rate of return the lender receives for permitting the borrower to use the mortgage money for a specified term. The interest rate is usually expressed as an annual percentage rate, calculated semi-annually, not in advance.

Interest Rate Differential Amount (IRD)
An IRD Amount is a prepayment charge that may apply if you pay off your mortgage principal prior to the maturity date or pay the mortgage principal down beyond the prepayment privilege amount. The IRD amount is equivalent to the difference between your annual interest rate and the posted interest rate on a mortgage that is closest to the remainder of the term less any rate discount you received, multiplied by the amount being prepaid, and multiplied by the time that is remaining on the term. For more information, see prepayment charges.

Interest Adjustment Date (I.A.D.)
The date the term of the mortgage starts and is usually the first of the month. An interest-only payment on mortgage funds advanced prior to the IAD will be due on this date. The first regular monthly principal and interest payment is due one month after the IAD.

Interim Financing
Short-term financing to help a buyer bridge the gap between the closing date on the purchase of a new home and the closing date on the sale of the current home.

Job Letter

A letter from your employer stating your length of employment, guaranteed number of hours worked per week, and income amount.

Land Transfer Tax
A tax that is levied (in some provinces) on any property that changes hands.

Leasehold Mortgage
A mortgage loan on a home where the building is on leased (rented) land. The lender takes an interest in the lease.

Legal Fees and Disbursements
Some of the legal costs associated with the sale or purchase of a property. It’s in your best interest to engage the services of a real estate lawyer (or a notary in Quebec).

The individual, party or financial institution from whom money is borrowed. Also known as the mortgagee, in the case of a mortgage loan.

A financial obligation of an individual, such as credit card debt, car payments, mortgage payments, etc.

Licensed Mortgage Associate
A Licensed Mortgage Associate is the most common person within a brokerage to deal with clients. A Mortgage Associate will take clients’ applications on behalf of the brokerage, and walk them through the mortgage process.

A claim against a property to secure the payment of a debt or other obligation.

Lien Laws
Provincial laws which allow a contractor’s unpaid suppliers and workers to make claims against your property for payments that are outstanding to them with respect to work or materials related to your project.

Line of Credit

A type of credit which offers an individual immediate access to any portion or all of a pre-determined amount of cash upon demand. A line of credit may be either unsecured or secured with personal assets such as bonds, term deposits or equity on a home. A secured line of credit results in lower risk to the financial institution and a lower rate of interest to the individual.

A borrowed amount of money that is generally repaid in full as well as with a certain amount of interest.

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

Loans Officer
A loans officer is an employee of a lending institution that functions as the liaison between that lender and it’s customers that are applying for a loan.

Lump Sum Payment
An extra payment that you make to reduce the amount of your mortgage principal.

Market Value
The highest price a buyer would pay and the lowest price a seller would accept on a property. Market value could differ from the price that the property could be sold for at a given time.

Maturity Date
Last day of the term of the mortgage agreement.

A loan that you take out in order to buy property. The collateral is the property itself.

Mortgage Affordability
Mortgage affordability is the amount of money a mortgage borrower can make on a monthly basis towards a mortgage, based upon their income, expenses, and the proposed monthly payment.

Mortgage amortization
Mortgage amortization is the process of repaying a mortgage loan.

Mortgage application
First step in obtaining financing for a real estate purchase.

Mortgage balance
A mortgage balance is the full amount owed at any period of time during the duration of the mortgage, and is the sum of the remaining principal owing and accrued interest.

Mortgage Broker
A mortgage brokerage must employ a mortgage Broker to oversee the brokerage employees. Generally Brokers are responsible for the management role within the brokerage. They are also responsible for ensuring that the brokerage remains compliant. An individual must be a Licensed Mortgage Associate for two years before being eligible to become a Broker.

Mortgage Company
A mortgage company is a business with the principal activity of providing or servicing mortgage loans. A mortgage company may be a chartered bank, a credit union, a trust company or other financial institution providing mortgage loans.

Mortgage Deed
A mortgage deed is a document in which the mortgagor transfers an interest in real estate to a mortgagee for the purpose of providing a mortgage loan.

Mortgage Holder
A mortgage holder is an individual or entity who owns the mortgage loan that was extended to a homeowner, and is the party entitled to enforce the terms of the mortgage.

Mortgage Insurance
This is insurance that is required for high-ratio mortgages. It protects the lender in the event that a borrower defaults on a mortgage. The three mortgage insurers in Canada are CMHC(Canadian Mortgage and Housing Corporation), Genworth, and AIG. Prior to the creation of CMHC, Canadians could not purchase a home without a 25% down payment.

Mortgage Lead
A mortgage lead is a generic term referring to a potential mortgage borrower or a potential mortgage customer for a mortgage lender or mortgage broker.

Mortgage Lender
A mortgage lender is an entity that provides financing for the purchase of real estate.

Mortgage Default Insurance
This insurance is mandatory for borrowers with a down payment of less than 20%.

Mortgage Life Insurance
Insurance under which the benefits are used to pay off the balance due on a mortgage upon the death of the insured borrower. The intent is to protect survivors from losing their homes.

Mortgage Insurance
Distinct from mortgage life insurance or home, property, fire and casualty insurance; mortgage insurance provides protection to the lender in the event of a default by the borrower.

Mortgage Loan
A mortgage loan is a loan secured by real estate owned by the borrower.

Mortgage Payment
A mortgage payment is a periodic amount paid to a mortgage holder for repayment of a mortgage loan.

Mortgage Principal
Mortgage principal is the outstanding balance of your mortgage.

Mortgage Qualification
Mortgage qualification is the process of applying for a mortgage, having a mortgage application underwritten and submitting mortgage documents to a mortgage lender for review. The qualification is the standard by which the lender will lend money on a mortgage loan.

Mortgage Rate
Mortgage rate is the interest that a mortgage borrower will pay for money borrowed against a mortgage.

Mortgage Statement
A statement received from your mortgage lender that includes such information as property address, outstanding principal balance, monthly payment, interest rate, mortgage term, etc.

Mortgage Term
A mortgage term is the length of time, usually in years, in which the parameters of a mortgage have legal effect.

A lender who advances a mortgage to a borrower, where repayment of the loan is secured by a charge on real property.

A borrower who gives title to, or a charge on, real property to a mortgagee to secure repayment of a mortgage loan.

Multiple Listing Services (MLS)
A computerized listing of the properties available in your area, including information and sometimes pictures of each property.

National Housing Act (NHA) Loan
A mortgage loan insured by Canadian Mortgage and Housing Corporation (CMHC).

Notice of Assessment (NOA)
This is also known as an NOA. It is the summary form that Revenue Canada sends you after your income tax has been filed. It specifies what you claimed on your taxes last year, as well as the amount of taxes you owe, or the amount of money that you will be received as a tax refund.

Offer to Purchase
A written contract setting forth the terms under which the buyer agrees to purchase a property. Upon acceptance by the seller, it forms a contract which determines the rights and obligations of the buyer and seller concerning the purchase and sale. 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 or excluded from the sale.

Open Mortgage
A mortgage which can be prepaid at any time prior to maturity, without breakage costs.

Overnight Rate
The overnight rate is the interest rate at which large banks borrow money, short term, among themselves.

Payment Frequency
The choice of making regular mortgage payments every week, every other week, twice a month or monthly.

Pay Stub
Usually a document you receive from your employer on your pay day stating, for that pay period, your gross earnings, the amount of CPP payments deducted, the amount of EI payments deducted, the amount of income, income taxes deducted, net income, etc. Your pay stub should also state the year to date amounts of all the aforementioned income and payments.

Formal authorization, usually from your municipality, that allows you to proceed with your renovations.

Principal, interest and taxes. Together, these make up the regular payment on a mortgage if you elect to include property taxes in your mortgage payments.

The technical drawings — or blueprints — of the project. Should include the specifications.

This allows you to move to another property without having to lose your existing interest rate. You can keep your existing mortgage balance, term and interest rate plus save money by avoiding early discharge penalties.

Portable Mortgage
A portable mortgage is a mortgage that permits the mortgage borrower to transfer their mortgage balance to a new property and with the same lender without penalties.

Pre-approved Mortgage
A pre-approved mortgage qualifies you for a loan amount before you start looking for houses. It also acts as a rate hold, guaranteeing you today’s interest rates until up to 120 days in the future.

Prepaid property tax and utility adjustments
The amount you will owe if the person selling you the home has prepaid any property taxes or utility bills. The amount to reimburse them will be calculated based on the closing date.

Property Survey
A legal description of your property and its location and dimensions. An up-to-date survey is usually required by your mortgage lender. If not available from the vendor, your lawyer can obtain the property survey for a fee.

Prepayment Charge
Compensation when the borrower prepays all or part of a closed mortgage more quickly than is allowed as set out in the mortgage agreement.

Repaying part of your mortgage ahead of schedule. Depending on your mortgage agreement, there may be a prepayment cost for pre-paying.

Prepayment Option
The right to pay specified amounts of the principal balance prior to the maturity date of the mortgage. Breakage costs may be payable when a prepayment option is exercised under a closed mortgage.

Prepayment Penalties
If you “break” (or pay off) your mortgage before your term is up, you’ll have to pay a prepayment penalty. The penalty is generally three months’ interest payments.

Prepayment Privilege
Some mortgages allow you prepayment privileges. Examples of these are doubling up payments, paying off a certain percentage of your mortgage principal a year, or increasing your monthly mortgage payments by a certain percentage.

The amount of the loan owed to the lender at any specified time, not including interest.

Prime Rate
Prime rate or prime lending refers to the lowest commercial interest rate charged by a banks at a particular time.

Property Tax Assessment

A property tax assessment is a method of placing value on real estate for the purpose of taxation.

Purchase Contract
A legally binding document stating your (the buyer’s) intention to purchase a home from the seller provided that certain conditions be met (such as condition of financing, condition of a home inspection, etc.)

Rate Lock/Hold
A rate lock refers to an agreement between a mortgage lender and a borrower to fix a certain interest rate for a number of days between the issuance of a mortgage approval and closing of the real estate purchase and mortgage loan.

Readvanceable Mortgage
A readvanceable mortgage is a feature of some mortgage lines of credit, including home equity lines of credit (HELOC).

Real Estate Agent
A person who is authorized to act as an agent for the sale of real estate on behalf of the property owner.

Real Estate Appraisal
A report prepared by a real estate appraiser that estimates the value of a home and states features/properties of the home. Lenders generally require appraisals to verify that the buyer has purchased the home for a fair market price, to determine what the market rents are for the home, to ensure that the home meets the lender’s standards, to determine how much equity the home owner has in the home, etc.

Real Estate Agent
A licensed agent employed to negotiate the purchase and sale transaction between the buyer and the seller.

Renegotiating your existing mortgage agreement. May include increasing the principal or paying out the mortgage in full.

At the end of a mortgage term, the mortgage may “roll over” on new terms and conditions acceptable to both the lender and the borrower. This is known as renewing a mortgage. Otherwise, the lender is entitled to be repaid in full. In this case, the borrower may seek alternative financing.

Reverse Mortgage
A reverse mortgage is a type of mortgage loan available in Canada that is designed for homeowners 60 years and older.

Sale Contract

A sale contract is a written agreement between a buyer and seller of real estate, setting forth the terms of the sale, and specifying the rights and duties of the parties in the real estate transaction.

Sales Taxes
Taxes applied to the purchase cost of a property. Some properties are sales tax exempt (GST and/or PST), and some are not. For instance, residential resale properties are usually GST exempt, while new properties require GST. Always ask before signing an offer.

Second Mortgage

The mortgage whose holder has the second place claim on assets in the event of default.

In the case of mortgages, real estate offered as collateral for the loan.

Secondary Homes
A secondary home is a property other than the owner’s principal residence. It may be purchased to meet special family circumstances or work demands, or as a cottage or leisure residence, and is intended for occupancy by the owner or a relative (on a rent free basis) at some time during the year. It does not include rental properties, part-time rentals, timeshares or rental pools.

(see Easement)

Semi-monthly mortgage payments
Semi monthly mortgage payments are structured for the borrower to make payments 2 times per month, for instance, on the 1st and 15th of each month.

A detailed description of the scope of the work and the quality and quantity of materials to be used. The specifications should also clearly indicate how the work will be carried out and what the final appearance will be. The specifications should form part of the contract.

A tradesperson hired to do specific work such as plumbing, wiring or electrical work that the crew is unable to perform. The subcontractor takes instructions from, is paid by, and is responsible to the contractor.

(see Certificate of Location)

Sweat Equity
Equity created by a purchaser or homeowner by performing work on a property being purchased or refinanced.

Take out Mortgage
A take out mortgage is a mortgage loan used to “take out” equity for other purposes.

TDS Ratio
TDS stands for Total Debt Service. This is the percentage of annual gross income that is required to cover mortgage principal payments, mortgage interest payments, property taxes, and heat payments, plus monthly payments of any other debt the borrower holds. If the property is a condominium, condo fees will also be worked into this ratio.

The length of time during which the specific mortgage agreement is effective. When the term expires, the balance of the principal is either repaid in full or the mortgage is renegotiated at then-current market rates and conditions.

Third Mortgage
A third mortgage is a lien on property subordinate or junior to the first and second mortgages.

Right of ownership of property, and including evidence of such ownership.

Title Insurance
Insurance that protects the owner or mortgagee of the property from any lawsuits or claims arising from a defective title.

Total Debt Service Ratio
The percentage of the borrower’s gross income that will be used for monthly payments of principal, interest, taxes, heating and other outstanding loans and debts.

(see Subcontractor)

Type A or Type B Vacation Properties
Generally speaking, Type A vacation properties are the same as standard residential properties in terms of quality of construction and materials used. They have year-round road access, and generally meet standard residential property lending requirements. Type B vacation properties meet all Type A property requirements except for (1) A standard heating system is not required & (2) Year-round road access is not required (unplowed road in the winter is acceptable).

The process of deciding whether or not to provide a mortgage loan to a home buyer based on credit, employment, assets and other factors. This is also the matching of the home buyer to a mortgage lender, mortgage product, interest rate, mortgage term, etc.

Variable Rate Mortgage
An interest rate on a mortgage that fluctuates according to changes in the prime lending rate. A variable rate mortgage has payments which are fixed for the term, even though interest rates may fluctuate during that time. If interest rates go down, more of the payment is applied to reduce the principal; if rates go up, more of the payment is applied to payment of interest. Variable rate mortgages may be open or closed.

Void Cheque
A personal, pre-printed cheque with “void” written across is. This is provided to the lender for the account your mortgage payments will be coming out of, as proof that the account is, indeed, yours.

Zoning Laws
Municipal laws prescribing the use of land for specific purposes, and the use to which buildings on the land may be put.