AMORTIZATION
The gradual retirement of a debt by means of partial payments of the principal at regular intervals, usually 25 years but can be longer (up to 40 years).

ASSUMABLE
Most mortgages are assumable - with qualification. So you can sell your house, the buyer can take over the mortgage.

BLENDED RATE
Blended rates may be done to accommodate an adjustment to your contractual interest rate in the event of lower rates, porting your mortgage to a different property or a request for an increase of your balance.

CLOSING DATE
Also known as COMPLETION DATE. The date on which the sale of a property becomes final, title is transferred into your name. This is the date you need to pay your money to the lawyer.

COMPLETION DATE
Also known as CLOSING DATE. The date on which the sale of a property becomes final, title is transferred into your name. This is the date you need to pay your money to the lawyer.

CONVERIBLE MORTGAGE
A short term mortgage (usually 6 months) that is convertible to a longer fixed term at any time.

DEBT SERVICE RATIO
A percentage of your gross income that is allowable to service your mortgage payments, strata fees, property taxes, heat and debts such as loans, lines of credit and visa.

DEPOSIT
A sum of money required to be paid with an offer to purchase as a symbol of the purchaser's commitment. If the offer is accepted, the deposit is applied to the down payment. The deposit is payable at the time of the offer or upon all subjects being removed. It is therefore very important that you offer a deposit in the amount that you can cover from your own resources.

DOWNPAYMENT
The amount of money put forward by the buyer toward the purchase price of a home. All mortgages with less that 25% down payment require mortgage insurance.

FIXED RATE MORTGAGES
The interest rate is fixed for a specified term. If the mortgage is paid prior to maturity of the term, a penalty applies. Some mortgages do not allow for early payout in the first three years except for when there is a bona fide sale. The penalty is usually the greater of three months’ interest or the interest rate differential.

GUARANTOR
A third party who agrees to guarantee payment to the lender in the event of payment arrears.

INTEREST RATE HOLDS
When you apply for a mortgage, the lender will hold the interest rate for a period of 60 - 120 days. Completion date must be within that period of time in order to be guaranteed the interest rate should the rates go up.

LINE OF CREDIT
Simply put, it is overdraft facility on your bank account. Can be either secured by a mortgage or unsecured.

MATURITY DATE
The date your mortgage matures. At maturity, your mortgage can be renewed, paid in full or switched/transferred without penalty.

OPEN MORTGAGES
The mortgage can be repaid without penalty. Fixed terms are usually 6 months or 1 year and come with a guaranteed interest rate. Alternatively, variable rate mortgages or a line of credit are available, usually at lower interest rates than fixed term, however the rate will float with Prime.

PENALTIES
If the mortgage is paid out within the "term" of the mortgage, a penalty will apply on most mortgages. With fixed rate/convertible mortgages, the penalty is usually the greater of three months’ interest or the interest rate differential. VARIABLE RATE MORTGAGES also have a penalty which varies from lender to lender.

PI
Refers to the principal & interest portion of a mortgage payment.

PITS
Refers to the principal, interest & tax portion of a mortgage payment.

PORTABLE
Most mortgages are portable. You can “port” your mortgage to another property. While you are allowed to “port” your balance and interest rate, you must still qualify for the new mortgage. You must give clear title to the purchasers of your existing property and provide a new mortgage to the lender for the new property you are buying.

PRE-APPROVAL
The process of providing financial information in order to determine the maximum amount of mortgage you will qualify for. This process usually includes an interest rate hold and a list of conditions that need to be met. Conditions would include such things as employment/income verification, down payment etc.

PREPAYMENT PRIVLEGES
Vary greatly between lenders

Increase in payment - 10 - 25% - once a year or once within the term
Lump sum payment - 10 - 25% - once a year - usually on any payment date with minimum of $100
Double up payments - available with some lenders

PRE-QUALIFY
The process of providing financial information in order to determine the maximum amount of mortgage you will qualify for. This process usually includes an interest rate hold and a list of conditions that need to be met. Conditions would include such things as employment/income verification, down payment etc.

PRIME INTEREST RATE
Prime rate is the rate that lenders use as a benchmark for interest rates on variable rate mortgages, lines of credit, interim financing and bridge financing. Prime rate will float up and down.

RATE HOLD
Length of time that a lender will hold an interest rate. This varies from 60 – 120 days. Some lenders will hold the rate only on the term requested while other lenders will blanket the rate to include any term.

SURVEY
A survey is a document that is required by most lenders (not required for strata properties) and is the responsibility of the lawyer to provide this information to the lender. If you are buying a house, it’s a good idea to have a survey as it provides information of your property’s boundaries, measurements and structures. It will also describe any easements, right-of-way, or encroachments.

An alternative to a survey is “title insurance”

TERM
The length of time during which the special conditions of the mortgage remain in force. At the end of the term, things such as interest rate, pre-payment privileges, etc. are re-negotiated.

TITLE INSURANCE
Title insurance protects the lender (and you for an additional cost) against fraud, forgery, title defects and survey problems. It is the lawyer’s responsibility to arrange for this insurance for you if needed. Title insurance can be an alternative to a survey.

VARIABLE RATE MORTGAGE
The rate floats based on prime rate. Interest rate will move up/down as the prime rate changes. A variable rate mortgage can usually be locked into a fixed term at any time. Penalties on Variable Rate Mortgages differ from Fixed Rate Mortgage and vary from lender to lender.