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THE HOME BUYER'S GLOSSARY
Amortization Period - The actual number of years it will take to pay off your mortgage loan. Appraised Value - An estimate of the value of the property. Conducted for the purpose of mortgage lending. Closed Mortgage - A mortgage that locks you into a specific payment schedule. A penalty usually applies if you repay the loan in full before the end of the term. Conventional Mortgage - A mortgage loan issued for up to 75% of the property's appraised value or purchase price, whichever is less. Down Payment - The buyer's initial payment on the property. The difference between the purchase price and the amount of the mortgage loan. Equity - The difference between the home's selling value and the debts against it. High-Ratio Mortgage - A mortgage that is between 75% and 100% of the home's appraised value. These mortgages must be insured. Interest Rate - The amount charged by the lender for using the lender's money (expressed as a percentage). Land Transfer Tax - A fee paid to the municipal and/or provincial government for the transferring of property from seller to buyer. For more details see Purchaser Info -> Moving Costs. Maturity Date - The end of the term, at which time you can pay off the mortgage or renew it for another term. Mortgagee - The person or financial institution that lends the money. Mortgagor - The borrower. Mortgage Insurance - Applies to high-ratio mortgages. It protects the lender against loss if the borrower is unable to repay the mortgage. Open Mortgages - Allows partial or full payment of the principal at any time, without penalty. Portability - A mortgage option that enables borrowers to take their current mortgage with them to another property without penalty. Pre-approved Mortgage - Qualifies you for a mortgage before you start shopping. You know exactly how much you can spend and are free to make a "firm" offer when you find the right home. Prepayment Privilege - Voluntary payments in addition to regular mortgage payments. Principal - The amount borrowed or still owing on a mortgage loan. Interest is paid on the principal amount. Refinancing - Paying off the existing mortgage and arranging a new one or renegotiating the terms and conditions of an existing mortgage. Renewal - Renegotiation of a mortgage loan at the end of a term for a new term. Second Mortgage - Additional financing. Usually has a shorter term and higher interest rate than the first mortgage. Term - The length of time the interest rate is fixed. It also indicates when the money becomes due and payable to the lender. Variable-Rate Mortgage - A mortgage with fixed payments, but fluctuating interest rates. The changing interest rate determines how much of the payment goes towards the principal. |
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12612 Highway 50, Unit 1, Bolton, Ontario L7E 1T6, Canada |