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GLOSSARY OF TERMS |
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AMORTIZATION PERIOD The time required to pay a mortgage loan in full, assuming the interest rate remains constant. APPRAISAL The process through which the value of the property is determined for a mortgage. The lending value may or may not match the purchase price. ASSUMPTION AGREEMENT A legal document signed by a home buyer requiring the home buyer to assume responsibility for the obligations of a mortgage. BUILDING PERMIT A certificate obtained from the municipality before a building can be erected or repaired. CLOSED MORTGAGE A mortgage agreement which does not allow early pay out of the loan without a penalty. CLOSING DATE The date on which the sale agreement becomes final and title is passed to the purchaser. CONVENTIONAL MORTGAGE A loan from an institutional lender of up to 75 per cent of the value of the property. DEFAULT Failure to repay a loan as agreed. DOWN PAYMENT The amount of money the purchaser puts forth through his own resources when buying a property. EASEMENT A right aquired for access to, or over, another person's land for a specific purpose, such as for a driveway or a public utility. ENCUMBRANCE A registered claim for debt against a property such as a mortgage. EQUITY (OWNER) The interest of the owner in a property over and above all claims to the property, usually the difference between the amount of the encumbrance and the market value of the property. FORECLOSURE A legal procedure through which the lender may obtain ownership of the property if the borrower defaults. GROSS DEBT SERVICE RATIO (GDS) The percentage of the borrower's gross income that will be used for monthly payments of principal, interest, taxes, half of condominium fees and heating costs. HOLDBACK The amount of money withheld by a lender during the construction of a building to ensure that work is completed satisfactorily. |
CONSTRUCTION (MECHANIC'S) LIEN A claim against a property for money owing. A lien may be filed by a supplier or subcontractor who has provided material and has not received payment for them. MORTGAGE Security for a loan on property owned. MORTGAGEE The lendor who provides the mortgage funds. MORTGAGOR The borrower who pledges his property as security for a loan. MORTGAGE INSURANCE PREMIUM A premium that is charged to the borrower to insure the mortgage lender against loss in case of default. The mortgage insurance premium may be added to the mortgage debt. MORTGAGE PREPAYMENT CLAUSE A clause in a mortgage document which allows the borrower to repay the mortgage in full, or in part, before the specified date on the mortgage document. NATIONAL HOUSING ACT APPROVAL Your guarantee that a lending institution is authorized, as such, by the federal government, under the terms of the National Housing Act. OFFER TO PURCHASE A written contract stating the terms under which the buyer agrees to buy. When accepted by the vendor, it forms a legal contract. OPTION AGREEMENT A document which stipulates that in exchange for a deposit, an individual is to be given first chance to buy a property within a certain time period. P.I.T Principal, interest and taxes due on a monthly mortgage. P.I.T.H Principal, interest, taxes and heating costs used in calculating the amount a borrower can afford to arrive at a gross debt service ratio. POSSESSION DATE The date on which the purchaser expects to move into the new property. ROLL-OVER MORTGAGE A mortgage loan where the interest rate is established for a specific term, usually between one and five years, but at the end of the term, the mortgage is said to 'roll-over', and the borrower and the lender may agree to extend the loan. SECOND MORTGAGE A mortgage loan granted when there is already one against the property. | |
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please contact Robert Pugh via: Office: (613) 831-4455 Fax: (613) 831-4781 Direct: 24 Hour Pager thru the Office |
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