• Sellers’ Glossary

    AMORTIZATION PERIOD:

    The actual number of years it will take to pay back your mortgage loan.

    APPRAISED VALUE:

    An estimate of the value of the property. Conducted for the purpose of mortgage lending by a certified appraiser. This appraisal is not to be confused with a building inspection.

    ASSUMABILITY:

    Allows the buyer to take over the seller’s mortgage on the property.

    CLOSED MORTGAGE:

    A mortgage that locks you into a specific payment schedule. A penalty usually applies if you repay the loan in full before the end of a closed term.

    CONDOMINIUM FEE:

    A common payment among owners which is allocated to pay expenses.

    CONVENTIONAL MORTGAGE:

    A mortgage loan issued for up to 75% of the property’s appraised value or purchase price, whichever is less.

    DOWN PAYMENT:

    The buyer’s cash payment toward the property. The difference between the purchase price and the amount of the mortgage loan.

    EQUITY:

    The difference between the home’s selling value and the debts against it.

    HIGH-RATIO MORTGAGE:

    A mortgage that exceeds 75% of the home’s appraised value. These mortgages must be insured for payment.

    INTEREST RATE:

    The value charged by the lender for the use of the lender’s money. Expressed as a percentage.

    LAND TRANSFER TAX, DEED TAX OR PROPERTY PURCHASE TAX:

    A fee paid to the municipal and /or provincial government for the transferring of property from seller to buyer.

    MATURITY DATE:

    The end of the term, at which time you can pay off the mortgage or renew it.

    MORTGAGEE:

    The borrower.

    MORTGAGE INSURANCE:

    Applies to high-ratio mortgages. It protects the lender against loss if the borrower is unable to repay the mortgage.

    MORTGAGE LIFE INSURANCE:

    Pays off the mortgage if the borrower dies.

    MORTGAGOR:

    The person or the financial institution that lends the money.

    OPEN MORTGAGE:

    Allows partial or full payment of the principal at any time, without penalty.

    PORTABILITY:

    A mortgage option that enables borrowers to take their current mortgage with them to another property, without penalty.

    PRE-APPROVED MORTGAGE:

    Qualifies you for a mortgage before you start shopping. You know exactly how much you can spend and are free to make a “firm” offer when you find the right home.

    PREPAYMENT PRIVILEGES:

    Voluntary payments in addition to regular mortgage payments.

    PRINCIPAL:

    The amount borrowed or still owing on a mortgage loan. Interest is paid on the principal amount.

    REFINANCING:

    Paying off the existing mortgage and arranging a new one or re-negotiating the terms and conditions of an existing mortgage.

    RENEWAL:

    Re-negotiation of a mortgage loan at the end of a term for a new term.

    SECOND MORTGAGE:

    Additional financing. Usually has a shorter term and higher interest rate than the first mortgage.

    TERM:

    The length of time the interest rate is fixed. It also indicates when the principal balance becomes due and payable to the lender.

    TITLE:

    Legal ownership in a property.

    VARIABLE-RATE MORTGAGE:

    A mortgage with fixed payments, but fluctuates with interest rates. The changing interest rate determines how much of the payment goes towards the principal.

    VENDOR TAKE-BACK MORTGAGE:

    When the seller provides some or all of the mortgage financing in order to sell their property.

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