Number of fixed payments or years it takes to repay the entire mortgage loan. |
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A legal document signed by a home buyer that requires the buyer to assume responsibility for the obligations of a former owner's mortgage. |
Equal payments consisting of both a principal and an interest component, paid each month during the term of the mortgage. Each month, the principal portion increases while the interest portion decreases, but the total monthly payment does not change. |
A mortgage which cannot be prepaid, renegotiated or refinanced. |
A mortgage loan which does not exceed 75% of the appraised value or purchase price of the property, whichever is less. Mortgages that exceed this limit must be insured. |
The percentage of the borrower's gross income that will be used for monthly payments of principal, interest, taxes, heating costs and condominium fees. |
Non-payment of instalments due under the terms of a mortgage. |
Removal of all mortgages and financial encumbrances on a property. |
A legal procedure whereby the lender obtains ownership of the property following default by the borrower. |
The percentage of gross annual income required to cover payments associated with housing (mortgage principal and interest, taxes and secondary financing). Most lenders prefer the GDS be no more than 32%. |
A premium added to the mortgage and paid by the borrower over the life of the mortgage. The mortgage insurance insures the lender against loss in case of default by the borrower. |
A form of reducing term insurance recommended for the borrower. In the event of the death of an owner, the insurance pays out the balance of the mortgage. The intent is to protect survivors from losing their home. |
The lender. |
The borrower. |
A mortgage that can be prepaid at any time without penalty. |
Principal and interest due on a mortgage. |
Principal, interest and taxes due on a mortgage. |
A sum of money paid to a lender for the privilege of prepaying a mortgage in part or in full. |
The right to prepay specified amounts of the principal balance. Penalty interest may be incurred on prepayment options. |
The amount you owe the lender at any given time. |
The return the lender receives for loaning you the money for the mortgage. |
A mortgage loan whose interest rate is established for a specific term. At the end of this term, the mortgage is said to "roll over" and the borrower and lender may agree to extend the loan. If satisfactory terms cannot be agreed upon, the lender is entitled to be repaid in full. In this case, the borrower may seek alternative financing. |
This is usually at a higher interest rate and represents the difference between the price of the home and first mortgage plus the downpayment. This may be obtained from lenders and finance companies or through lawyers or notaries. |
A mortgage "term" is the length of time for which money is loaned at a specified rate of interest. When the term expires, you can either repay the balance of the principal or renegotiate the mortgage at current rates and conditions. |
A sum of money collected by some lenders to offset expenses incurred in the lending transaction. |
A mortgage whose payments can be fixed from one to five years but whose interest rate could change monthly depending on market conditions. If interest rates go down, the monthly principal is reduced; if rates go up, the monthly payments might not cover the interest owing and payments may be increased for the next term. Most variable rate mortgages allow prepayment of any amount (with certain minimums) on any monthly payment date and usually without penalty. |
The seller sometimes takes the mortgage at a rate lower than market rates. Most of these arrangements are not renewable or transferable to the next owner. |
