Accelerated Payment Frequency
A schedule of weekly or bi-weekly payments that allows you to pay more towards your principal, reducing the amount of interest you pay and the life of your mortgage. The accelerated weekly payment is determined by dividing the monthly payment by four, and the accelerated bi-weekly payment is determined by dividing the monthly payment by two.
For example, if the regular monthly payment for your mortgage is $1,000, you will pay $12,000 a year in mortgage payments. But if you choose an accelerated weekly payment schedule, you will pay $250 per week (one quarter of the monthly payment of $1000), for a total of $13,000 (52 x $250). That's an additional $1,000 that will be applied towards the principal of your mortgage. The faster you pay your loan, the less interest you pay overall.
The amount of time it would take to repay a loan in full based on the payment amount at the selected payment frequency and current interest rate. You may choose mortgage amortizations from 1 to 35 years for conventional mortgages and 1 to 30 years for high ratio mortgages. Remember: the longer the amortization, the less each payment will be but the more interest you will pay overall.
Anti Money Laundering Legislation
Federal Anti-Money Laundering Legislation requires us to ask you what your intended use of this account is.
Annual Family Income Before Tax
Your Annual Family Income Before Tax is the total salary, and commissions, before deductions by all household members who are applicants for the mortgage.
If you are a regular salary earner, you should base your income on your gross annual income before taxes not including bonuses.
If you are a commission based earner or self-employed, you should base your income on an average of your last three years Notice of Assessments from Canada Revenue.
Annual Property Taxes
Property taxes vary for each property and are dependent on the city's property tax rate and the assessed property value. You can usually find the property taxes for a particular property on the MLS listing or you can ask your real-estate agent, builder, or local municipality.
The market value of your home, as determined by a certified appraiser.
Annual Percentage Rate (APR)
The APR expresses the cost of borrowing that you pay to get a loan, including interest and other applicable costs required by the lender (such as appraisal fees) as an annual rate on the principal amount.
Goods of value that you own. This can include investments, cash, property, vehicles and other assets. However, most lenders do not include certain assets, such as furniture, jewellery, or antique pieces, when determining the net worth of a loan applicant.
Assignable Mortgage (Transferable)
A mortgage that may be transferred to a new lender from another financial institution.
To be considered assignable, the mortgage cannot be collateral or privately held and must have the same individuals on the application as on the current mortgage. The most common collateral mortgages are revolving lines of credit that are secured against your home.
A mortgage that can be taken over by another person who buys your home. Mortgages are assumable, as long as the person taking over the loan meets usual credit criteria.
An interest rate determined by averaging out two different interest rates, usually your current rate used to calculate your payment and today's rate, taking into account the remaining term of your current mortgage.
Breaking A Mortgage
Your mortgage payments are set according to the interest rate charged for the term or period of time you will be making those payments. Should you wish to get out of these payments, you would be "breaking" the terms of your mortgage agreement, and could incur interest penalties in doing so.
A mortgage that cannot be repaid before maturity. Mortgages cannot be repaid before maturity without charge, which is typically three months interest or the prepayment interest rate differential amount, whichever is greater. However, borrowers may be able to make prepayments within their annual prepayment option of the original principal amount.
The day a transaction is completed and usually when money changes hands. When buying a property, the closing date is the day when the seller transfers ownership to the buyer. When getting a loan, the closing date is the day money is transferred from the lender to the borrower.
A person whose name does not appear first on the Mortgage or Credit Account documents but has the same rights and obligations as the Primary Borrower. There can be multiple Co-Borrowers (guarantors are not Co-Borrowers).
Condo fees vary depending on your property size and your condo maintenance requirements. To get an estimate, consult the property manager for the condo you are looking to buy, your real-estate agent, or builder. The ongoing maintenance fees charged by the condominium board can affect the amount of mortgage you can qualify for.
A mortgage loan for an amount up to 80% of the value of the property.
Variable rate mortgages may be converted at any time and without charge into a fixed rate mortgage with a term of three years or more.
Cost of Borrowing
The costs charged to the borrower by the lender to obtain a loan, including not just interest but also certain other charges such as appraisal fees. When you obtain a mortgage, you will be informed of your cost of borrowing both as an amount and as an Annual Percentage Rate on the principal amount.
A legal document that confirms ownership of the property. In Quebec, a deed of hypothec sets out the terms of the mortgage.
The failure to do something that you promised to do, such as make a payment as agreed in a mortgage.
Should you sell your current home financed with a mortgage, break your current mortgage contract, make a prepayment equal to the remaining balance of your mortgage or pay off your mortgage in full through regular payments, you will be required to obtain a discharge of the mortgage registration from your mortgage provider. A discharge certifies that the mortgage on your home has been paid off in full, and that your home is free and clear of any obligations owing.
An amount of money you put towards the purchase of your home, which influences the mortgage amount you require. A down payment of 20% or more will determine whether your mortgage needs mortgage default insurance. If your down payment is less than 20% of your purchase price, your mortgage is high-ratio and needs mortgage default insurance. If your down payment is 20% or more of the purchase price, your mortgage is conventional and generally does not need mortgage default insurance. Other circumstances however may also require mortgage default insurance.
You may find yourself wanting to renew your existing mortgage prior to the scheduled maturity date. Should this be the case, you do have options available that would enable you to take advantage of today's lower rates. With some lenders, if your mortgage maturity is within 120 days of its maturity date, you can renew your mortgage at today's rates, without penalty. If your mortgage maturity date is more than 120 days away, you can blend the interest rate of your current mortgage with the interest rate available today and lock in a new term. Or you can break your mortgage and get a new term at today's interest rate (interest penalties may apply). I can help you assess whether the interest savings outweighs the penalty amount.
To estimate the value of your home, check your annual property tax assessment provided by your municipality. Please note that the Appraised Value of your property may be different from the value provided by your municipality.
A document that outlines the legal and financial state of a condominium corporation.
The mortgage that is registered in first position at the land registry office. If there is more than one loan mortgage registered against your property, the mortgage that is registered first must be paid out first in the event of sale or default.
A person who will make repayments on a loan if the borrower fails to do so.
A mortgage loan for an amount that is more than 80% of the value of the property.
The difference between the value of your home and the total amount of your outstanding mortgage. For the purpose of getting a mortgage, the value of your home is determined by a certified appraiser at the time of the application.
An interest rate set by the bank or lender that fluctuates according to market conditions and the Bank of Canada's economic outlook.
The basic amount of money it costs to obtain a loan. Interest is included in your regular monthly mortgage payment. Interest is calculated on the day of each regular payment, based on the outstanding principal amount at that time, so the faster you reduce your principal, the less interest you pay.
The percentage that will determine the amount of interest that you are required to pay.
Interest Adjustment Date
Mortgage payments are made in arrears. In other words, when each payment period is over, lenders look back and calculate their interest based on the money you owed during that period.
The interest adjustment date is the date from which your lender first starts calculating the normal ongoing interest that you’ll pay.
Interest adjustment dates tend to commonly fall on the 1st day of the month after mortgage funds are advanced to the borrower.
For example, suppose you close your mortgage on April 25 and have signed up for monthly payments. Here is how the dates might stack up:
April 25: Mortgage starts (a.k.a. the closing date)
May 1: Interest adjustment date
June 1: First payment date
The right to use property for a set period of time. In other words, you do not own the property.
The amount that you owe to creditors. Examples include mortgages, credit card balances, line of credit balances, personal loans, car loans, etc.
Loan to Value (LTV) Ratio
The Loan to Value ratio describes the principal amount of a mortgage loan in relation to the value of the property.
For example, if your property is worth $100,000 and you made a down payment of $25,000, your required mortgage amount will be $75,000 and your LTV is 75%.
The LTV helps determine whether or not mortgage default insurance is required. LTV of 80% or less will be a conventional mortgage and will generally not need mortgage default insurance. LTV of more than 80% will be a high-ratio mortgage and will need mortgage default insurance. Other circumstances may also require mortgage default insurance.
Lump Sum Payment
You can benefit from the use of prepayment options that make it possible to pay off your mortgage faster. Clients can make one time or on-going lump sum prepayments of their original mortgage balance, each mortgage year, without penalty.
The maturity date is the last day of the term of your mortgage. Any outstanding balance is due on this date. However, if you have an outstanding balance you will usually have the opportunity to renew your mortgage into a new mortgage with a new principal amount, interest rate, term and amortization.
A mortgage is a loan that is secured by property. The word mortgage actually defines the rights over the property given by the borrower (property owner) in exchange for the loan.
Mortgage Life Insurance
Creditor insurance that pays off the remaining mortgage debt in the event of a borrower's death.
Mortgage Loan Insurance pays the lender in the event the mortgage borrower defaults on making payments. Such insurance is required by law for high ratio mortgages (those for an amount greater than 80% of the value of the property) and may be required under other circumstances. Should mortgage loan insurance be required, the lender will obtain Mortgage Loan Insurance on behalf of their mortgage Client from either Canada Mortgage and Housing Corporation (CMHC), Genworth Financial Canada or Canada Guaranty.
Mortgage loan insurance premiums are determined by the insurer and are the responsibility of the mortgage client. They can be paid by making a one-time payment to the lender or by having the premium added to the total mortgage amount and thus become part of your regular mortgage payments.
For more information about Mortgage Loan Insurance or to calculate the premium, you can visit CMHC, Genworth or Canada Guaranty websites at: www.cmhc.ca or www.genworth.ca. Or www.canadaguarantee.ca
The regular payment of principal and interest under a mortgage payment schedule. Most lenders offer weekly, bi-weekly, semi-monthly and monthly payment frequencies.
A mortgage is set for a pre-determined amount of time or term at funding or when renewed. Should the mortgage term be terminated prior to the maturity date either through sale of the home, early renewal or discharge, the mortgage client could be subject to penalties. The applicable penalties would be equal to the greater of the interest rate differential or 3 months interest plus any applicable fees related to the discharge request.
A report from Multiple Listing Service (MLS) describing the details of a property, including property taxes, measurements and features. It is provided by your real estate agent.
Number of Units
The number of self-contained living spaces within the property. For example, a self-contained living space would include a separate entrance, a kitchen, bathroom and living quarters that could be rented out.
A mortgage you can take with you to your new home at your current rate, term and mortgage amount (or increase it with a blended rate). All our mortgages are portable.
We can pre-approve a mortgage to a set maximum principal amount even before you find a house. This will guarantee your interest rate for 120 days on fixed term loans and can help you establish a price range in which to search for a home.
Prepayment Interest Rate Differential Amount
When the borrower pays off a loan before maturity at a time that interest rates are lower than the borrower's loan, the prepayment interest rate differential amount represents the difference between interest that the lender would have obtained from the borrower if the borrower kept with the loan, and interest that the lender can obtain under current interest rates.
For example, if the borrower pays out a loan with an interest rate of 7% and three years remaining at a time when the interest rate for a three year loan is 5%, the prepayment interest rate differential amount will represent 2% interest for three years on the outstanding balance at the time of payout.
Prepayment Options (Flexible Prepayment Options)
The prepayment options allow you to prepay some of the loan above and beyond your regular scheduled payments, at no charge – which could save you thousands over the life of your mortgage. This will depend on the type of mortgage and lender privileges. Example 20/25 prepayment privilege:
- Make a principal payment of up to 20% of the initial amount, annually
- Increase your regular mortgage payments by up to 25% of the initial payment amount, annually
The person whose name appears first on the Mortgage or Credit Account documents. There can only be one Primary Borrower.
The amount of money that you borrow.
Property Legal Description
The legal description of a property as described in the land registry office. Property legal descriptions look different based on the location of the property. The description can be typically found on a municipal property tax assessment.
The actual amount paid to purchase the property. This does not include any fees associated with the purchase (such as land transfer tax, legal fees, insurance, etc.) or interest to be paid on the mortgage.
If you are considering applying for a mortgage, but you're not ready to apply yet, the rate hold could be for you. A rate hold program essentially holds a fixed rate or the spread on a variable rate for up to 120 days from the date of request without having to apply. It can only apply to one interest rate, for one term at a time. If you apply and fund a mortgage within the 120 days of the rate hold start date, you will receive the lowest rate during this period.
A property or other asset offered as collateral for a loan. In the case of a mortgage, the property you are purchasing or refinancing forms the security for your loan.
For a Variable Rate Mortgage, it is the difference between Prime and the actual (posted) rate. So if Prime is 4.00% and the posted rate is 5.00%, the spread is 1.00%.
A document providing details of the boundaries of your property, including measurements and structures.
The length of the loan. At the end of the term (on the maturity date), you must repay the outstanding principal amount, if any. Usually you have the option then to make the repayment or to renew the mortgage into a new loan with a new principal amount, interest rate, term and amortization.
The right of ownership over the property.
Insurance that protects your title to your property mainly through undiscovered title errors, survey problems, and even against fraud and forgery.
A detailed examination of registered title documents to ensure that there are no rights over the property that may affect the owner's title.
Variable Rate Mortgage
A mortgage that has an interest rate that fluctuates over time. Variable rate mortgages have an interest rate that may change to reflect changes in the prime rate.
Geographic zones in a municipality designated for specific uses. For example, zoning by-laws will designate the types of buildings that can be built in certain places, such as residential, industrial, or commercial.