Mortgage

Definition

• A temporary and conditional agreement that stipulates the use of real property as collateral to a creditor for the guaranteed repayment of a loan. The mortgage incurs a rate of interest that varies according to term and other loan features.

Synonyms
hypothèque, amortized bank loan, hypothec, mortgage loan, funding, financing, borrow, prêt, bond, home loan

Acronyms
mtg

Alternate Spellings
moneylender, mortgage loan, lender, Home Loan

Related Terms and Acronyms

• Accredited Mortgage Professional (AMP) — Acronym, Canada, Very Important,
  • The Accredited Mortgage Professional (AMP) is the only national proficiency standard created by CAAMP for Canada's mortgage industry.
  ➥ Accreditation offered by Canadian Association of Accredited Mortgage Professionals (CAAMP).
• Adjustable-Rate Mortgage (ARM) — Acronym,
  • A type of mortgage loan program in which the interest rate and payments may be adjusted as frequently as every month. The principal loan balance or term of the loan may also be adjusted to reflect the rate change. The purpose of the program is to allow mortgage interest rates to fluctuate with market conditions.
  ➥ A type of variable rate mortgage product.
• Alienation Clause — Definition,
  • A requirement that the borrower pay the mortgage in full upon transfer of the property.
• Alternative Mortgage — Definition, Important,
  • A home loan that is not a standard fixed-rate mortgage.
• Amortized Loan — Definition,
  • A loan that is completely paid off, interest and principal, by a series of regular payments that are equal or nearly equal.
• Annual Mortgage Statement — Definition, Important,
  • A report sent to the borrower every year, detailing how much principal remains on the home loan and how much was paid in taxes and interest during the previous year.
• Approval — Definition,
  • An assessment made by a lender of a borrower's ability to pay for a home and a confirmation of the amount the borrower may obtain.
• Asset-Backed Securities (ABS) — Acronym, Very Important,
  • Securities backed by a pool of assets.
  ➥ Financial security made up of a bundle of assets.
• Assumable Mortgage — Definition, Very Important,
  • A mortgage that can be taken over or "assumed" by the buyer when a home is sold.
• Balloon Mortgage — Definition,
  • A loan that has regular monthly payments which amortize over a stated term but call for a final lump sum (balloon payment) at the end of a specified term, or maturity date, such as 10 years.
• Blended Rate Mortgage — Definition, Important,
  • 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.
• Borrow — Definition,
  • Sand, gravel or other material used for grading; a slope.
  • To get a loan of money.
• Bridge Loan — Definition,
  • 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.
• Building and Loan Association — Definition,
  • A financial institution designed to help members finance real-estate transactions.
• Canada Mortgage and Housing Corporation (CMHC) — Company Est. 1946, Canada-wide, Very Important,
  • 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.
• Cash Back Mortgage — Definition, Important,
  • A mortgage that provides the borrower a lump sum cash payment.
• Cash Out Refinance — Definition,
  • 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.
• Chattel — Definition,
  • Personal property that can be moved.
• Chattel Mortgage — Definition, Important,
  • A loan backed by movable personal property. Generally mobile or trailer homes.
• Closed Mortgage — Definition, Important,
  • Closed mortgages involve a strict repayment schedule of a specific amount with optional limited lump sum payments and payment increases.
• Commercial Mortgage — Definition, Very Important,
  • A mortgage for commercial property.
• Contractual Lien — Definition,
  • A legal claim against property as a result of a voluntary contract, such as a mortgage.
• Conventional Mortgage — Definition, Important,
  • A mortgage that is not insured or guaranteed by CMHC or GE Capital.
• Convertible Mortgage — Definition, Important,
  • A mortgage where the borrower has the option at specified times to change the term length.
• Cooperative Mortgage — Definition, Important,
  • A loan that allows the borrower to buy into a co-op project.
• Debt Consolidation — Definition,
  • The replacement of multiple loans with a single loan, often with a lower monthly payment and a longer repayment period. It's also called a consolidation loan. CanEquity has access to Canada's best debt consolidation products, for more info about debt consolidation see our debt consolidation page.
• Debt-to-Income Ratio — Definition,
  • The percentage of an individual's income that is used to repay debt.
• Declining Life Insurance — Definition,
  • Life insurance with a decreasing death benefit, often used to insure mortgage debt.
• Delinquent Mortgage — Definition, Important,
  • A mortgage loan where the borrower fails to make payments as specified in the loan agreement.
• Due-on-sale Clause — Definition,
  • A condition of a mortgage that states that the loan must be paid when the house is sold. Commonly used in reverse mortgage lending.
• End Loan — Definition,
  • The final mortgage on a property, as opposed to a construction or other interim loan.
• Finance Charge — Definition,
  • Charges that include all of the interest expected to be earned over the life of a loan, in addition to the service charges, mortgage insurance premiums, and other loan-related charges.
• Firm Commitment — Definition,
  • A lender's promise to lend money to a specific borrower on specified terms at a certain time.
• First Lien — Definition,
  • Primary claim by the lender for satisfaction of outstanding debt. A first mortgage creates a first lien.
• First Mortgage — Definition, Important,
  • A mortgage that is the primary lien against a property.
• Fixed Instalment — Definition,
  • Periodic (usually monthly) payment on a loan whose sum does not vary.
• Fixed Rate Mortgage (FRM) — Acronym, Very Important,
  • A loan in which the interest rate and payments remain the same for the entire life of the loan. The interest rate and payment amounts are set at the time of loan origination.
• Forbearance — Definition,
  • Delaying foreclosure, usually because the borrower has arranged to pay the amount in arrears.
• Foreclosure — Definition,
  • The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.
• Full Income Verification — Definition,
  • A requirement for fully documented proof of income; loans of this type usually offer lower interest rates than no-income or "no-doc" verification loans.
• Gift From a Family Member — Definition,
  • A gift of cash, to a mortgage applicant from a relative by blood or marriage, which the applicant is not required to repay. In some instances it is necessary to provide a written statement to that repayment is not required.
• Guaranty — Definition,
  • A promise to assume responsibility for a debt if the borrower defaults.
• High-ratio Mortgage — Definition, Important,
  • A mortgage in which a borrower places a down payment of less than 20% of the purchase price.
• Home Buyers' Plan (HBP) — Acronym, Canada, Very Important,
  • A way for a homebuyer to use part of his or her RRSP as a down payment on a mortgage.
  ➥ Government assistance for first-time homebuyers.
• Home Equity Loan (HEL) — Acronym, Very Important,
  • A loan that can replace or be an addition to the first mortgage. Typically used as a home improvement loan.
  ➥ Also known as an Equity Take Out (ETO).
• Home Loan — Definition,
  • A loan used to buy a home is referred to as a "mortgage."
• Interest (IN, int) — Acronym & Abbreviation,
  • Money paid for the use of borrowed funds, usually expressed as an annual percentage.
  ➥ Bank account transaction code.
• Interest Adjustment Date — Definition,
  • The date one month prior to the beginning of amortization when accrued interest computed on the monies advanced becomes due.
• Interest Factor — Definition,
  • The decimal equivalent for an interest rate on a unit amount for a period of time. Computed by interest rate divided by number of days in a basic year times the number of days accrued.
• Interest Only Payments — Definition,
  • A payment plan where only the interest is paid off.
• Interest Rate (IR) — Acronym, Very Important,
  • The rate a lender charges an individual to borrow money.
• Interest Rate Cap — Definition,
  • A limit to the interest rate increases and decreases on an adjustable rate loan; either from one adjustment period to the next or over the life of the loan.
• Interest Rate Differential (IRD) — Acronym, Very Important,
  • The penalty one pays for breaking a mortgage.
• Interest-Crediting Methods — Definition,
  • A number of methods used to establish how interest is accrued, owed and dispersed to the parties due.
• Interim Financing — Definition,
  • The availability of funds on a daily basis to assist a developer with financing for a construction project between advances made by the lender of the construction loan.
• Joint Liability — Definition,
  • The responsibility of two or more people to repay a debt
• Land Draw — Definition,
  • A construction loan backed by the value of the land.
• Late Payment — Definition,
  • A sum a borrower sends to a lender that is received past the date when it was due.
• Lead Lender — Definition,
  • A financial institution which heads up a financial consortium or syndicate to provide funds for a mortgage.
• Leasehold Mortgage — Definition, Important,
  • A mortgage given by a lessee on the security of his leasehold interests in the land.
• Lender — Definition,
  • The bank or mortgage company offering the loan.
• Lending Value — Definition,
  • The property value for mortgage purposes. Usually the lesser of appraised value or sale price.
• Loan — Definition,
  • Letting another party use something of value temporarily.
• Loan Processing — Definition,
  • The steps taken by a lender to convert a loan application into an approved loan for the potential borrower. These steps include processing the application, conducting a credit investigation, evaluating the loan, etc.
• Loan Servicing — Definition,
  • Supervising a loan after it has been made. This could involve collecting payments, keeping accounting records, computing interest and principal, etc.
• Loan-to-Value (LTV) — Acronym, Very Important,
  • The ratio of the principal amount of the loan to the lesser of the purchase price of the property or the property's appraised value. This can be expressed as an 80% loan, or 80% LTV.
  ➥ A widely used term in the mortgage brokerage and lending industry, especially by mortgage underwriters.
• Long-term Liabilities — Definition,
  • Money owed over a period longer than 12 months, such as mortgages, bank loans, and other obligations.
• Low-down Mortgages — Definition, Important,
  • Mortgages with a low down payment, usually less than 10 percent.
• LPQ Amount — Definition,
  • A term used by CanEquity which is short for Loan, Purchase or Qualification amount.
• Mortgage Broker (MB) — Acronym, Important,
  • One who finds clients perspective lenders at generally no cost. Mortgage Brokers have a special relationship with lenders and can offer their clients the best rates and service. CanEquity goes through great lengths to ensure you are serviced by the best Mortgage Brokers in Canada.
• Mortgage Brokerage — Definition, Very Important,
  • An individual or group who brokers deals between their clients and lenders.
  ➥ CanEquity is a mortgage brokerage.
• Mortgage Insurance — Definition, Very Important,
  • Insurance that protects a lender if a homeowner fails to pay off his or her mortgage.
  • A policy covering a mortgagor from which the benefits are intended (a) to pay off the balance due on a mortgage upon the death of the insured, or (b) to meet the payments on a mortgage as they fall due in the case of his death or disability.
  ➥ CanEquity offers mortgage insurance.
• Mortgage Lender (ML) — Acronym, Very Important,
  • A lender that offers mortgages, often through a mortgage broker.
  ➥ Used internally by mortgage brokers and mortgage lenders.
• Mortgage Lien — Definition, Important,
  • A legal claim against a mortgaged property which must be paid when the property is sold.
• Mortgage Life Insurance — Definition, Very Important,
  • Insurance that covers the costs of paying off a mortgage if the insured dies or becomes disabled.
• Mortgage Payment — Definition, Important,
  • A periodic payment used to pay off a mortgage's principal and interest.
• Mortgage Rate — Definition, Very Important,
  • The interest rate on a mortgage loan.
  ➥ You can compare mortgage rates using this website by clicking 'Rates' above.
• Mortgage Renewal — Definition, Very Important,
  • 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, Important,
  • Securities backed by mortgage debt.
• Mortgagee — Definition, Important,
  • The lender in a mortgage transaction.
• Mortgagor — Definition,
  • The borrower in a mortgage transaction.
• No Money Down Mortgage — Definition, Important,
  • Available in Canada as a true 100% mortgage financing product.
• One-year Adjustable — Definition,
  • 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, Important,
  • A mortgage that can be paid off prior to maturity without penalty.
• Original Principal Balance — Definition,
  • The amount borrowed.
• Origination Date — Definition,
  • The date on which a loan is funded.
• Origination Fee — Definition,
  • 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.
• Portfolio Lender — Definition,
  • A company that underwrites mortgage loans and keeps them on the books instead of selling them on the secondary market.
• Porting — Definition,
  • A portable mortgage allows you to transfer the terms and conditions from an existing property loan to a new property loan.
• Pre-approval — Definition,
  • 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,
  • The date when a pre-approved mortgage expires, often 90 - 120 days after being pre-approved.
• Pre-paid Interest — Definition,
  • Interest that a borrower pays before it is due, usually to save taxes.
• Pre-payment — Definition,
  • Applying additional payments towards the balance of a mortgage loan.
• Pre-payment Clause — Definition,
  • 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,
  • A lender's charge to the borrower for paying off the loan before the end of the term.
• Principal — Definition,
  • The original balance of money lent on an outstanding loan and fees, excluding interest. Also the remaining balance of a loan, excluding interest.
• Principal and Interest (P&I, PI) — Acronym,
  • Acronym for the elements of a mortgage payment: principal and interest.
• Principal, Interest and Taxes (PIT) — Acronym, Important,
  • Principal, interest and taxes. The components of a monthly mortgage payment.
• Principal, Interest, Taxes, and Insurance (PITI) — Acronym,
  • Acronym for the elements of a mortgage payment: principal, interest, taxes and insurance.
• Promissory Note (PN) — Acronym,
  • A written promise to repay a loan by a specified time.
• Purchase Price — Definition,
  • The total selling price of the home, including the cash down payment and the principal on the loan.
• Qualifying Ratios — Definition,
  • As calculated by lenders, the percentage of income that is spent on housing debt and combined household debt. The first qualifying ratio, called the gross debt service or GDS is up to and including a maximum of 32% of the combined gross family income. The second qualifying ratio is the Total debt service or TDS is up to and including 40% of gross income.
• Real Estate (RE) — Acronym, Very Important,
  • A section of land including all the natural resources (above and below the surface) and any permanent buildings or structures located on it. Also known as "realty."
• Reconveyance — Definition,
  • The transfer of title to the borrower after a mortgage has been paid fully.
• Refinance — Definition,
  • To arrange a new loan for an increased amount or better terms whereby the old loan is paid off from the proceeds of the new loan.
• Refinancing — Definition,
  • The act of paying off one mortgage with another mortgage to take advantage of lower interest rates. Refinancing is also used to transform equity into cash for vacations, home improvements, or for consolidating debt.
• Remaining Term — Definition,
  • The time it will take to pay off the rest of an instalment loan as scheduled.
• Retail Banking — Definition,
  • Banking services offered to individual customers such as savings accounts, personal loans, cheque cashing, and RRSPs.
• Reverse Mortgage — Definition, Important,
  • A loan that allows an older homeowner to convert built-up equity into cash. The loan comes due when the owner dies, sells the house or moves out.
• Roll In Loans — Definition,
  • A refinancing loan that rolls any closing costs or fees into the loan. These programs best serve people who have a reasonable amount of home equity, want to reduce their overall interest expense, and plan to stay in their homes.
• Second Home Mortgage — Definition, Important,
  • A mortgage used purchase property, often a vacation or a rental property.
• Second Mortgage — Definition, Important,
  • A mortgage which ranks after a first mortgage in priority on a registered land title.
• Secured Debt — Definition,
  • A debt that is secured by a lien on debtor's property that may be taken by the creditor in case of non-payment by the debtor. A common example is a mortgage loan.
• Secured Loan — Definition,
  • Borrowed money that is backed by collateral.
• Self Employed Person (SEP) — Acronym,
  • A person who runs a trade or business, rather than working as an employee for someone else. You are self-employed if you are a sole proprietor or a partner working in a business. You can be an employee and self-employed at the same time if you have an independent business outside your regular employee hours. To qualify for many business tax exclusions and deductions, the enterprise must make a profit in three of five years. In most cases in order to qualify you must take and average of the last 2-3 years tax assessments.
• Shared-Appreciation Mortgage (SAM) — Acronym,
  • A mortgage loan where the lender or a third-party backer agrees to offer a highly reduced mortgage rate to the borrower in exchange of sharing profits when the property is sold.
  • A home loan in which the lender offers a below-market interest rate in exchange for sharing in the profit when the home is sold. Usually done only with private funds/lenders.
• Small- and Medium-sized Enterprises (SMEs) — Abbreviation,
  • Limits banks place on businesses to determine there size.
  ➥ A term widely used by the World Bank and the World Trade Organization (WTO).
• Standby Commitment — Definition,
  • A commitment from a lender to make a loan in a specified period of time on specified terms with the understanding that the borrower will not likely draw down the funds.
• Step-rate Mortgage — Definition, Important,
  • A fixed-rate home loan on which payments are lower at the beginning, typically for two years, and which then rise.
• Sub-prime Mortgage — Definition, Important,
  • A mortgage loan that is granted to a borrower who is considered sub-prime (has a less-than-perfect credit report). Sub-prime borrowers have either missed payments on a debt or have made late payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may default on the loan.
• Subordinate Loan — Definition,
  • A mortgage whose priority is below that of another mortgage; i.e., a second or third mortgage or a home-equity loan.
• Syndicated Loans — Definition,
  • Loans given to a company that are backed by a group of banks who share the risk of a large transaction. There is usually a lead bank and several participating banks.
• Teaser Rate — Definition,
  • Often called the introductory rate, it is the below-market interest rate offered to entice customers to switch credit cards or lenders.
• Testimonial — Definition,
  • A statement of support for a product or service.
• Third-party Originator — Definition,
  • One who takes all or part of the mortgage application and transfers or sells it to a lender.
• Total Annual Loan Cost (TALC) — Acronym,
  • A method of finding the annual cost of a reverse loan.
• Type 'A' Property — Definition,
  • Residential property that is centrally heated and accessible year-round.
• Type 'B' Property — Definition,
  • Property that may not be centrally heated or may only be seasonally accessible.
• Umbrella Mortgage — Definition,
  • A specific arrangement where one document encompasses one or more already existing mortgages registered on the same property. The mortgagee is responsible for remission of payment(s), to lender(s), while the mortgagor makes one payment to the mortgagee. Also referred to as a wraparound.
• Unaffiliated Investments — Definition,
  • Investments in assets made by an insurance company where they have no control over the assets.
• Variable Interest Mortgage — Definition, Important,
  • A loan where the interest rate may vary during the term of the mortgage. The variance is usually tied to some specific factor such as prime bank rate or the guaranteed investment certificate rate for a designated lender.
• Variable Rate Mortgage (VRM) — Acronym, Very Important,
  • Home loan in which the interest rate is changed periodically based on a standard financial index. Also called an "Adjustable-rate Mortgage."
  ➥ A type of mortgage loan offered by brokers and lenders.
• Workout — Definition,
  • A "mortgage workout" is when a lender works with a borrower on altering their existing mortgage terms in order to prevent a foreclosure.
• Wraparound Mortgage — Definition,
  • A refinanced home loan in which the balances on all mortgages are combined into one loan.
• Zero Down Mortgage — Definition,
  • A mortgage product that allows the borrower to financing 100% of their property.