Mortgage Glossary – N

Negative Amortization – An increase in loan debt which occurs when the monthly payment does not cover the complete principal and interest due. The difference is added to the remaining balance which extends the amortization period.

No Money Down Mortgage – A 100% financed mortgage offered in Canada. This product is helpful to individuals that are unable to save a down payment. Good credit and higher interest rates are required for a no money down mortgage.

Notice of Assessment or NOA – A legal form issued by the Canada Revenue Agency when personal taxes are assessed. The NOA indicated the total taxable income.

Mortgage Glossary – M

Market Value – The value a homeowner should receive based on comparative sales.

Mortgage – A conditional pledge of property to a creditor as security for a repayment of a debt on a property.

Mortgage Broker – A person who works in the interest of their client to facilitate a loan between the borrower and lender. Mortgage brokers in Canada often work at no charge to their clients.

Mortgage Insurance – An insurance policy that covers the outstanding mortgage amount. Mortgage Insurance payout generally decreases as the mortgage is repayed.

Mortgage Life Insurance – A policy that pays off an entire mortgage should the borrower become deceased.

Mortgage Rate – The interest rate on a mortgage.

Mortgage Renewal – The right of a lender to renew the terms and conditions of a mortgage.

Mortgagee – The lender in a mortgage.

Mortgagor – The borrower in a mortgage.

Mortgage Glossary – L

Land — Land is any part of the earth not covered by water. In real estate, this includes any physical structure above or below the land that it occupies.

Land Contract — A legal contract or agreement is that the purchaser agrees to pay the seller stipulated amounts at specified intervals until the purchased price is paid; the seller has legal title of the land as security for the payments.

Land Title – A legal document proving ownership of a property.

Late Charge — A fee charged to the borrower for having late payments.

Late Payment — A fee paid by the borrower for making late payment(s). This amount is usually predetermined in a contract.

Leasehold – A piece of land that is leased to an individual or organization for a pre determined time period. Leaseholds are generally written for 100 years or more.

Legal Description – The precise address of a property as determined by municipal government. Legal descriptions include Lot and Plan.

Lender – A financial institution that lends money in order to gain interest.

Liabilities – owed debts that legally obligated to the lender.

Lien – A legal claim of a creditor on a property owned by another party.

Line of Credit – A pre determined loan amount that allows clients to draw on funds and repay the debt with out penalty or security.

Loan Application – A document filled out by applicants who want to borrow money.

Loan to Value or LTV- The ratio determined by the principal amount of a loan divided by the purchase price.

Low-documentation Loan – A loan that requires very little documentation in order to qualify.

Low-down-payment Loan – A mortgage in which the borrower can put down a very small down payment in order to be approved for a mortgage.

Mortgage Glossary – J

Joint Credit – An issuance of credit to two people. Both parties are responsible for the repayment of any debt incurred on credit.

Judgment – A decision made by a court of law or a judicial decision

Mortgage Glossary – I

Inspection Report – A written report produced by an inspector indicating the status of a property.

Interest Rate – the amount charged on a loan in order to borrow. The rate is usually expressed as an Annual Percentage Rate or APR.

Installment – A regular payments towards a settlement of a debt

Interest Adjustment Date – The date prior to the beginning of amortization when accrued interest computed on the monies advanced is due.

Mortgage Glossary – H

Hold Back – A certain amount of money held back by the lender to ensure completion of construction on a new property or improvement on a property.

Home Equity – The difference between the fair market value or appraised value on a property and the amount left owing on the mortgage.

Home Equity Line of Credit – A loan made to the borrower as a revolving credit secured by the property.

Home Equity Loan – A loan generally used to renovate a property. The loan is secured by the property.

Mortgage Glossary – G

Genworth Financial – Formerly known as GE Capital. Genworth is the CMHC insurance alternative in Canada. Genworth provides banks/lenders with mortgage insurance. This insurance is generally required when you have less than 25% equity or down payment or there is a Loan to value greater than 75%. This insurance is paid by the property owner in advance but usually added to the mortgage amount.

Gift From a Family Member – money that is given to another family member for the purchase of a home. Gifts can not be borrowed and it is understood that the gift will at no time be repaid.

Gift Letter – A document required from lenders to prove that gifts are not being borrowed.

Gross Debt Ratio or GDS – The ratio of the monthly mortgage payment in total (PIT — Principal, Interest and Taxes) divided by the gross monthly income.

Gross Income – The amount of money received from employment before income tax is deducted.

Mortgage Glossary – F

Fiduciary Duty – A mandatory requirement that person in a position of trust acts in the best interest of his or her client.

Finder Fee – A fee provided to the agent to match a borrower with a lender.

First Mortgage – A mortgagor who has first right on title of the property

Fixed Rate Mortgage (FRM) – A mortgage that has a set monthly payment based on the term and interest the client has chosen at loan origination.

Foreclosure – the process in which a lender can legally seize and sell a property due to the home owner not able or willing to make payments.

Mortgage Glossary – E

Effective Age – An estimation of a property’s age made by an appraiser. The effective age can be less than, equal to or greater than the actual Age.

Equifax – One of two major credit bureau company in Canada. The other bureau being Trans Union.

Equity – the difference between the appraised or sale value and the remaining mortgage amount.