Mortgage
Security for a loan to purchase property. It is the purchaser’s personal guarantee to repay the loan and a pledge of the property as security for the loan.
Amortization
The period of time required to reduce a debt to zero when payments are made regularly. Amortization periods are most often 15, 20, or 25 years long.
Closed Mortgage
A mortgage loan that has a locked-in payment schedule, which does not vary over the life of the closed term.
Open Mortgage
A type of mortgage loan where the borrower can make a partial or full payment of the principal amount at any time, without penalty.
Discharge of Mortgage
A document signed by the lender and given to the borrower when a mortgage loan has been repaid in full.
Foreclosure
A legal procedure in which the lender gets ownership of the property if the borrower defaults on the mortgage loan.
Maturity Date
The last day of the term of the mortgage agreement. On this day the mortgage loan must be paid in full or the agreement renewed.
Mortgage Loan Insurance
Insurance required by lenders for high-ratio mortgages (more than 75% of the purchase price). It is available from CMHC or a private insurer for a cost of between 0.5% and 3% of the amount of the mortgage.
Prepayment Privileges
Allows the borrower to make voluntary payments on the mortgage loan, in addition to the regular, scheduled mortgage payments.
Property Tax
A toll paid to the provincial and/or municipal government(s) for transferring property to the buyer from the seller.
Term
The length of time during which a mortgagor pays a specific interest rate on the mortgage loan. The entire mortgage principal is usually not paid off at the end of the term because the amortization period is normally longer than the term.
Canadian Mortgage and Housing Corporation (CMHC)
Canada Mortgage and Housing Corporation (CMHC) is Canada’s national housing agency. CMHC helps Canadians access a variety of affordable housing options. CMHC is Canada’s premier provider of mortgage loan insurance, mortgage-backed securities, housing policy and programs, and housing research.
Contact Gemma or Gary Barclay