Canadian Financial, Real Estate and Mortgage Glossary

Words categorized under Mortgages

Bank of Canada (BC, BOC) — Company Est.1935, Ottawa, Ontario, Canada

Canada's central bank.

  ➥  Canada's central bank.

bank rate — Definition (Mortgages, Financial-banking)

Closely related to the overnight rate, the bank rate is the interest rate the Bank of Canada charges to banks and other major financial institutions for one-day loans.

bank spread — Definition (Investments, Mortgages, Financial-banking)

The difference between the interest rate a bank charges a borrower and the interest rate a bank pays a depositor.

basis point (BPS) — Definition (Mortgages, Financial-banking)

A unit of measure: 1/100th of one percent. For example, the difference between a 9.0% loan and a 9.5% loan is 50 basis points.

  ➥  Used by mortgage brokers and lenders when discussing mortgage rates and determining commissions.

biweekly accelerated payment — Definition (Mortgages)

A mortgage that schedules payments every two weeks instead of the standard monthly payment. The 26 biweekly payments are each equal to one-half of the monthly payment. The result for the borrower is a substantial reduction in interest payments because the mortgage is paid off sooner.

blanket mortgage — Definition (Mortgages)

A mortgage that covers more than one property owned by the same buyer.

blended rate mortgage — Definition (Mortgages)

If a homeowner renews his or her mortgage early, the old and the new mortgage rates are blended together to split the difference between the interest rates.

borrower — Definition (Investments, Mortgages, Financial-banking)

A person who borrows money or obtains a loan.

break-even point (BEP) — Definition (Mortgages, Real-estate, Financial-banking)

The point at which expenses meet income or savings. In home finance, the break-even point often refers to the time it takes to recoup the costs of refinancing a loan or paying discount points.

bridge financing — Definition (Mortgages, Real-estate, Financial-banking)

A short-term, high interest loan that allows a seller to purchase a new property before selling an existing property.

bridge loan — Definition (Mortgages, Real-estate, Financial-banking)

A loan that "bridges" the gap between the purchase of a new home and the sale of the borrower's current home. The borrower's current home is used as collateral and the money is used to close on the new home before the current home is sold. Some are structured so they completely pay off the old home's first mortgage at the bridge loan's closing, while others pile the new debt on top of the old. They usually run for a term of six months.

bridge mortgage — Definition (Mortgages, Financial-banking)

A short-term loan used to allow a homebuyer to purchase a replacement property while still trying to sell their existing home.

broker (Bkr) — Definition (Mortgages, Real-estate, Insurance, Financial-banking, Abbreviation, Legal-contracts)

A person or firm who acts on behalf of another.

building and loan association — Definition (Mortgages, Real-estate)

A financial institution designed to help members finance real-estate transactions.

buy-down — Definition (Mortgages)

When a borrower or a mortgage broker "buys down" a mortgage rate, they make an upfront payment to the lender in order to lower the mortgage rate. A similar effect can be achieved by making a lump sum payment at the beginning of a mortgage term.

buy-down mortgage — Definition (Mortgages)

A home loan in which the lender charges below-market interest in exchange for discount points.

call option — Definition (Mortgages, Legal-contracts)

A clause in a mortgage that gives the lender the right to request the balance at any time.

Canada Mortgage and Housing Corporation (CMHC) — Company Est.1946, Canada-wide

The Canada Mortgage and Housing Corporation: this is a Federally run institution that provides banks and lenders with mortgage insurance. Not to be confused with life or property insurance. In the event of default or foreclosure CMHC assumes responsibility of the property and reimburses the bank/lender the entire mortgage amount. This insurance is required generally when you have less than 25% equity or down payment. This insurance is paid by the property owner in advance but usually added to the mortgage amount. See also "G.E. Capital."

  ➥  Insures Canadian mortgage lenders.

cap — Definition (Mortgages, Financial-banking)

A limit imposed on an item.

capitalization — Definition (Investments, Mortgages, Taxation, Financial-banking)

An estimate of the value of a rental or commercial property using the rate of return on investment and the property's annual net operating income.

carrying costs — Definition (Mortgages, Real-estate, Taxation, Financial-banking)

The cost of maintaining a property.

cash back mortgage — Definition (Mortgages)

A mortgage that provides the borrower a lump sum cash payment.

cash flow — Definition (Investments, Mortgages, Taxation, Financial-banking)

The money an investment produces after subtracting cash expenses from income.

cash flow forecast — Definition (Investments, Mortgages, Taxation, Financial-banking)

An estimate of when and how much money will be received and paid out of a business. It usually records cash flow on a month-by-month basis for a period of two years.

cash out refinance — Definition (Mortgages)

The taking out of a new mortgage on the same property in which the amount borrowed is greater than the amount of the previous mortgage. The difference is taken out in cash.

central bank — Definition (Investments, Mortgages, Financial-banking)

An institution that manages a nation's monetary policy.

change frequency — Definition (Mortgages)

The scheduled period in which an adjustable-rate mortgage adjusts.

chattel — Definition (Mortgages, Financial-banking)

Personal property that can be moved.

chattel mortgage — Definition (Mortgages, Financial-banking)

A loan backed by movable personal property. Generally mobile or trailer homes.

closed mortgage — Definition (Mortgages)

Closed mortgages involve a strict repayment schedule of a specific amount with optional limited lump sum payments and payment increases.

closing — Definition (Mortgages, Real-estate, Legal-contracts)

In real estate, the delivery of a deed, the payment of the purchase price, the signing of notes, and the paying of closing costs, which completes a real estate transaction.

closing costs — Definition (Mortgages, Real-estate, Insurance, Financial-banking, Legal-contracts)

The miscellaneous expenses involved in closing a real estate transaction that are over and above the purchase price. Some of the closing costs include title insurance, appraisal fee.

closing date (cloda) — Definition (Investments, Mortgages, Real-estate, Financial-banking)

The date a buyer takes possession of a property title.

co-maker — Definition (Mortgages, Financial-banking)

Any party that co-signs a promissory note. All co-makers assume responsibility for the loan if any of the other co-signers renege.

co-mortgagor — Definition (Mortgages)

A party or individual who co-signs for a mortgage loan.

co-signer — Definition (Mortgages, Financial-banking, Legal-contracts)

A person who signs a promissory note that is also signed by one or more other parties. All parties take responsibility for the debt if any of the others renege.

collateral — Definition (Mortgages, Real-estate, Financial-banking, Legal-contracts)

Any property pledged as security for repayment of a debt.

collection — Definition (Mortgages, Financial-banking)

The efforts used to bring an overdue mortgage, or other debt current, and the filing of necessary notices to proceed with foreclosure when necessary.

collusion — Definition (Mortgages, Real-estate, Financial-banking, Legal-contracts)

A secret, deceitful agreement by two or more parties to defraud others.

combined loan-to-value (CLTV) — Definition (Mortgages)

The connection between the unpaid principal balances of all the mortgages on a property (first and second usually) and the property's appraised value (or sales price, if it is lower).

  ➥  A term used by mortgage lenders and mortgage underwriters.

commercial loan — Definition (Mortgages, Financial-banking)

A loan taken out by a business.

commercial mortgage — Definition (Mortgages, Financial-banking)

A mortgage for commercial property.

commission (comm) — Definition (Investments, Mortgages, Real-estate, Insurance, Financial-banking, Abbreviation)

A fee paid to a salesperson for selling a product to a customer.

commitment — Definition (Mortgages, Real-estate, Financial-banking)

A written agreement from a lender promising to lend money on certain terms for a specified time period.

commitment fee — Definition (Mortgages, Financial-banking)

A fee paid by a borrower to a lender who promises to lend money on certain terms for a specified time period.

common law marriage (CLM) — Definition (Mortgages, Real-estate, Financial-banking, Legal-contracts)

To be recognized as being married without foregoing a matrimonial ceremony.

comparables — Definition (Mortgages, Real-estate)

Refers to "comparable properties," which are used for comparative purposes in the appraisal process.

compound interest — Definition (Investments, Mortgages, Financial-banking)

Interest that is calculated by adding the interest earned in the current period to the principal and figuring the next period's interest on this "compounded" total amount.

compounding method — Definition (Investments, Mortgages, Financial-banking)

Used in Bank rate tables. These include: S--Simple interest. A--Compounded annually. H--Compounded semi-annually. Q--Compounded quarterly. M--Compounded monthly. D--Compounded daily.

conditional commitment — Definition (Mortgages, Financial-banking)

A promise by a lender to make a loan if the borrower meets certain requirements.