Canadian Financial, Real Estate and Mortgage Glossary

Words categorized under Mortgages

mortgage insurance — Definition (Mortgages, Estate-management, Insurance)

Insurance that protects a lender if a homeowner fails to pay off his or her mortgage.

  ➥  CanEquity offers mortgage insurance.

mortgage lender (ML) — Definition (Mortgages, Financial-banking)

A lender that offers mortgages, often through a mortgage broker.

  ➥  Used internally by mortgage brokers and mortgage lenders.

mortgage lien — Definition (Mortgages, Legal-contracts)

A legal claim against a mortgaged property which must be paid when the property is sold.

mortgage life insurance — Definition (Mortgages, Estate-management, Insurance)

Insurance that covers the costs of paying off a mortgage if the insured dies or becomes disabled.

mortgage payment — Definition (Mortgages)

A periodic payment used to pay off a mortgage's principal and interest.

mortgage rate — Definition (Mortgages)

The interest rate on a mortgage loan.

  ➥  You can compare mortgage rates using this website by clicking 'Rates' above.

mortgage renewal — Definition (Mortgages)

A renewal as it pertains to the mortgage industry is defined as having an existing mortgage term end and signing a new term to continue.

mortgage-backed securities — Definition (Investments, Mortgages)

Securities backed by mortgage debt.

mortgagee — Definition (Mortgages)

The lender in a mortgage transaction.

mortgagor — Definition (Mortgages)

The borrower in a mortgage transaction.

negative amortization — Definition (Mortgages, Financial-banking)

A gradual increase in loan debt that occurs when the monthly payment does not cover the entire principal and interest due. The shortfall is added to the remaining balance which creates "negative" amortization.

no credit history — Definition (Mortgages, Financial-banking)

To have no record of an individual's credit worthiness.

no money down mortgage — Definition (Mortgages)

Available in Canada as a true 100% mortgage financing product.

no-documentation loan — Definition (Mortgages, Financial-banking, Legal-contracts)

A mortgage in which the applicant provides a minimum of information -- name, address, Social Insurance number (so credit reports can be pulled), and contact information for an employer, if there is one. The underwriter decides on the loan based on the applicant's credit history, the appraised value of the house and size of down payment.

non-assumption clause — Definition (Mortgages, Real-estate, Legal-contracts)

A provision of a home loan that prohibits the transfer of the mortgage to another borrower without the lender's permission.

non-owner occupant — Definition (Investments, Mortgages, Real-estate, Financial-banking)

A borrower who purchases a property for investment or rental purposes and will not occupy the property.

non-recourse debt — Definition (Mortgages, Financial-banking)

A loan secured by collateral where the borrower is not personally liable.

note rate — Definition (Mortgages, Financial-banking)

The percentage paid by a borrower for the use of money, usually expressed as an annual percentage on a promissory note.

Notice of Assessment (NOA) — Canada

A form the federal government issues when personal taxes are complete. A notice of assessment shows a breakdown of the given years income along with the balance owing or refund.

  ➥  Canada Revenue Agency's T451 tax form.

notice of default (NOD) — Definition (Mortgages, Real-estate, Financial-banking, Legal-contracts)

The step in the foreclosure process where the lender informs the court that the borrower is in arrears.

one-year adjustable — Definition (Mortgages)

Mortgage whose annual rate changes yearly. The rate is usually based on movements of a published index plus a specified margin, chosen by the lender.

open mortgage — Definition (Mortgages)

A mortgage that can be paid off prior to maturity without penalty.

original principal balance — Definition (Mortgages, Financial-banking)

The amount borrowed.

origination date — Definition (Mortgages, Financial-banking)

The date on which a loan is funded.

origination fee — Definition (Mortgages, Financial-banking)

The fee a lender charges to process a loan. It usually includes the cost to prepare loan documents, check a borrower's credit history, inspect the property and sometimes conduct an appraisal. CanEquity will in most cases use a lender who doesn't charge this fee or we will cover the cost in full.

owner occupant — Definition (Investments, Mortgages, Real-estate, Financial-banking)

A borrower who resides in the property used as security for the loan.

payment adjustment period — Definition (Mortgages)

The time period where payments on an adjustable-rate mortgage (ARM) may fluctuate.

payment cap — Definition (Mortgages)

A contractual limit on the size of the monthly payment of an adjustable-rate mortgage or other variable rate loan.

penalty — Definition (Mortgages, Financial-banking, Legal-contracts)

In mortgage terms, a penalty is a set rate or length of time the penalty will be charged based on the remaining loan amount. The penalty is usually three months interest or interest rate differential.

per diem interest — Definition (Mortgages, Financial-banking)

Interest that is charged daily; usually refers to the partial month's interest that the buyer pays on the mortgage covering the period from the day of closing to the end of the month.

periodic rate — Definition (Mortgages, Financial-banking)

The interest rate in relation to a specific amount of time. For example, the monthly periodic rate is the cost of credit per month whereas the daily periodic rate is the cost of credit per day.

periodic rate cap — Definition (Mortgages)

In an adjustable-rate mortgage (ARM), it limits how much an interest rate can increase or decrease from one adjustment period to the next.

personal loan — Definition (Mortgages, Financial-banking)

A loan made for personal, family, or household use as opposed to a business-type loan or a long-term mortgage loan to finance real estate.

point — Definition (Mortgages, Financial-banking)

A point equals 1 percent of a mortgage loan. Some lenders charge "origination points" to cover expenses of making a loan. Some borrowers pay "discount points" to reduce the loan's interest rate.

portfolio lender — Definition (Investments, Mortgages, Financial-banking)

A company that underwrites mortgage loans and keeps them on the books instead of selling them on the secondary market.

porting — Definition (Mortgages)

A portable mortgage allows you to transfer the terms and conditions from an existing property loan to a new property loan.

posted rate — Definition (Mortgages, Financial-banking)

The mortgage rates initially offered by a bank which a borrower is then expected to negotiate down.

power of sale — Definition (Mortgages, Financial-banking, Legal-contracts)

The right of a mortgagee to force the sale of the property without judicial proceedings should default occur.

pre-approval — Definition (Mortgages, Financial-banking)

A process that mortgage lenders use to determine how much money they would lend you based on a thorough review of your financial situation. Lenders issue a pre-approval letter which strengthens your position when bidding on a home, as it shows sellers that you will be able to raise funds needed to purchase.

pre-approval expiry date — Definition (Mortgages)

The date when a pre-approved mortgage expires, often 90 - 120 days after being pre-approved.

pre-approval letter — Definition (Mortgages, Financial-banking, Legal-contracts)

A document from a lender or broker, estimating how much a potential home-buyer could borrow, based on current interest rates and a preliminary look at credit history.

pre-paid expenses — Definition (Mortgages, Real-estate, Taxation, Insurance, Financial-banking)

also called prepaid items or prepaids -- Recurring costs such as taxes, insurance and interest that are paid at closing and which cannot be financed.

pre-paid interest — Definition (Mortgages, Taxation, Financial-banking)

Interest that a borrower pays before it is due, usually to save taxes.

pre-payment — Definition (Mortgages, Financial-banking)

Applying additional payments towards the balance of a mortgage loan.

pre-payment clause — Definition (Mortgages, Financial-banking, Legal-contracts)

A clause that stipulates the amount of principal a borrower may prepay ahead of schedule without penalty as well as the prepayment penalty for larger prepayments.

pre-payment penalty — Definition (Mortgages, Financial-banking, Legal-contracts)

A lender's charge to the borrower for paying off the loan before the end of the term.

pre-qualification — Definition (Mortgages, Financial-banking)

An informal process in which a lender will offer an opinion on how much money you may be able to borrow. This opinion is based entirely on the financial information you provide and is neither binding nor necessarily accurate because lenders have not yet verified your financial information.

predatory lending (PL) — Definition (Investments, Mortgages, Financial-banking, Legal-contracts)

Lending practices that are unfair, deceptive or fraudulent.

prime lending rate (PLR) — Definition (Investments, Mortgages, Financial-banking)

The rate of interest charged on loans by chartered banks to their most creditworthy customers.

  ➥  Bank of Canada's prime (best) lending rate.

prime rate — Definition (Mortgages, Financial-banking)

The rate suggested by the Bank of Canada on which most banks base their prime mortgage lending rate.