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A term used to describe the period of time over which the entire mortgage is to
be paid assuming regular payments.

An independent assessment of the property by a qualified individual.

Assuming a mortgage
Taking over the previous owner's (or builder's) mortgage when you buy a

Bridge Financing
A special short term loan needed to cover or bridge the gap in time between
completing the purchase of one property and finalizing arrangements to pay for it.
Usually this is a result of mismatched closing dates.

Closed and Open mortgages
A closed mortgage agreement does not provide for payout prior to maturity. A
lender may permit payout under certain circumstances but will levy a penalty
charge for doing so if such exceeds certain limits specified in the mortgage (i.e.
15% prepayment provision). An open mortgage allows prepayment / repayment
at any time without penalty.

Closing costs
Costs that are in addition to the purchase price of a property and which must be
paid on the closing date. Examples include legal fees, land transfer taxes, and

Closing date
The date on which the sale becomes final, the new owner takes possession of
the property, and funds are transferred from the purchaser to the vendor.

Conventional mortgage
A mortgage where the borrower is contributing 20% or more of the value of the
property as the down payment.

Convertible mortgage
A mortgage that you can change from short-term to long-term, depending on
your financial needs.

Debt service ratio
The percentage of the borrower's income used for monthly payments of principal,
interest, taxes, heating costs and condo fees (if applicable).

Pat Barnes                    Phone: 250-715-8259              Fax: 250-746-6862
The Mortgage Centre   

A homeowner is ‘in default’ when he or she breaks the terms of a mortgage
agreement, usually by not making required mortgage payments or by not making
payments on time.

Down payment
The money that you pay up-front for a house. Down payments typically range
from 5%-20% of the total value of the home.

The difference between the market value of a property and the amount owed on
the property. This difference is the amount a homeowner actually owns outright.

Fixed Rate Mortgage
A fixed rate mortgage is one for which the rate of interest is fixed for a specific
period of time (the term).

 High ratio mortgage
A mortgage where the borrower is contributing less than 20% of the value of the
property as the down payment.

Home inspection
A visual inspection of the major components of a home by a qualified individual,
who will give the home buyer a true and unbiased picture of the home's

Home insurance
Insurance to cover both your home and its contents (also referred to as property
insurance). This is different from mortgage life insurance, which pays the
outstanding balance of your mortgage in full if you die.

Interest adjustment
The amount of interest due between the date your mortgage starts and the date
the first mortgage payment is calculated from. Sometimes there is a gap between
the closing date of your home purchase and the first payment date of your

Joint Tenancy
Ownership of land by two or more persons whereby, on the death of one, the
survivor or survivors take the whole property.

Land transfer tax
A tax that is levied (in some provinces) on any property that changes hands.

Pat Barnes                     Phone: 250-715-8259               Fax: 250-746-6862
The Mortgage Centre     

Loan to Value Ratio
The ratio of the loan to the appraised value or purchase price of the property,
whichever is less, expressed as a percentage.

Lump sum payment
An extra payment that you make to reduce the amount of your mortgage.

Maturity Date
The last day of the term of the mortgage agreement. The mortgage agreement
must then be renewed or the mortgage balance paid in full.

A loan that you take out in order to buy property. The collateral is the property

Mortgagee is the lender; mortgagor is the borrower.

Mortgage broker
A company or individual who helps the homeowner find the right financing to buy
a property. A broker does not actually lend money but seeks out a lender and
arranges the mortgage terms. This may include negotiating with the lender for
the best possible deal for the homebuyer.

Mortgage default insurance
Required if you are contributing between 5% and 20% of the value of the
property as the down payment. The premium is a percentage of the mortgage.
The mortgage insurance insures the lender against loss in case of default by the

Mortgage life insurance
This form of insurance pays the outstanding balance of your mortgage in full if
you die. This is different from home or property insurance, which insures your
home and its contents.

Mortgage term
The length of time the interest rate is guaranteed for a mortgage. Mortgage terms
normally range from six months to ten years or more, after which you can repay
the balance of the principal owning or re-negotiate the mortgage at current rates.

Multiple Listing Service (MLS)
A computerized listing of the properties available in your area, including
information and pictures of each property.

Pat Barnes                     Phone: 250-715-8259              Fax: 250-746-6862
The Mortgage Centre    

Offer to purchase/conditional offer
A written contract outlining the terms under which the buyer agrees to purchase
the property. There may be conditions attached to the offer, for example: offer
being subject to arranging the mortgage or selling a home.

Open mortgage
A mortgage which you can pay off, renew or refinance at any time. The interest
rate for an open mortgage is usually higher than a closed mortgage rate.

Transferring an existing mortgage from one home to a new home when you
move. This is known as a "portable" mortgage.

Pre-paid property tax and utility adjustments
The amount you will owe if the person selling you the home has pre-paid any
property taxes or utility bills. The amount to reimburse them will be calculated
based on the closing date.

Repaying part of your mortgage ahead of schedule. Depending on your
mortgage agreement, there may be a penalty for pre-paying.

Increasing the amount of your current mortgage, at a new interest rate. The term
of the new mortgage must be equal to or greater than the term remaining on your
current mortgage.

To extend a mortgage agreement with the same lender for another term. The
length of the term and the conditions (such as the rate of interest) maybe
changed. Once the original term of your mortgage expires, you have the option of
renewing it with the original lender or paying off all of the outstanding balance.

Second Mortgage
A mortgage placed in 2nd position on property which is already encumbered with
a first mortgage. Determination of first, second, third mortgages is by priority of
registration (time and date).

A legal description of your property and its location and dimensions. An up-to-
date survey is usually required by your mortgage lender. If not available from the
vendor, your lawyer can obtain the property survey for a fee or arrange for Title
Insurance, which protects you against unknown or undetected title defects.

Pat Barnes                    Phone: 250-715-8259               Fax: 250-746-6862
The Mortgage Centre    

Tenancy in Common
Ownership of land by two or more persons: unlike joint tenancy in that the
interest of the deceased does not pass to the survivor, but is treated as an asset
of the deceased’s estate

Title Insurance
Protects you against unknown or undetected title defects such as existing liens,
violations of municipal by-laws, encroachments onto adjoining property, realty tax
arrears, lack of legal access to the property.

Variable rate mortgage
A mortgage with an interest rate that changes with the market. The rate can
change each month, so the portion of your monthly payment that goes towards
interest may go up or down each month. But your total monthly payment will
probably stay the same.

Pat Barnes                    Phone: 250-715-8259              Fax: 250-746-6862
The Mortgage Centre