Accelerated Mortgage Payments: Mortgage payments are calculated so that you pay 13 monthly payments rather than 12. For example: A bi-wekly payment (normally 2 payments per month or 24 half payments per year) is calculated by paying every 2 weeks or 26 half payments per year. This results in a large interest savings over the amortization period of your mortgage, and you'll be mortgage-free sooner.

Amortization Period: The number of years it will take to repay the loan in full - usually not longer than 25 years. Longer amortization periods result in lower monthly payments but higher interest paid over the life of the loan.

Appraised Value: An estimate of the value of the property. Conducted for the purpose of mortgage lending by a certified appraiser. This appraisal is not to be confused with a building inspection.

Assumable Mortgage: This is a mortgage which can be passed-on to the new buyer of a home by the seller. Often, if rates have increased, assuming an existing lower mortgage can be enticing to a buyer.

Closed Mortgage: Locks you into a specific payment schedule. Apenalty usually applies if you repay the loan in full before the end of the term.

CMA: "Comparative Market Analisys" -- This is an analysis of a property to determine the market value by comparing it to those homes currently for sale, those homes which have recently sold as well as those which tried to sell but were unsuccessful.

C.M.H.C.: "Canada Mortgage and Housing Corporation" -- This is a corporation of the Canadian federal government. C.M.H.C. Insurance (or the alternative G.E.M.I. Insurance) is required on all mortgages where the buyer has less than 25% downpayment.

Condominium.: The owner has title to a single unit, as well as a share in the common elements such as elevators and surrounding land.

Condominium Fee: A common payment among owners which is allocated to pay the expenses of the condominium corporation.

Conventional Mortgage: A loan for up to 75% of the purchase price or appraised value, whichever is less. You provide at least 25% of the financing as downpayment.

Downpayment: The buyer's cash payment toward the property. The difference between the purchase price and the amount of the mortgage loan.

Equity: The home's selling value or estimated selling value minus the debts against it and the cost of selling it.

G.E.M.I.: General Electric Mortgage Insurance -- This is a private alternative to the public C.M.H.C. Insurance. Many times, loans which are turned down by C.M.H.C. will be approved by G.E.M.I.

High-Ratio Mortgage: A loan for between 75% and 95% of the purchase price or appraised value, whichever is less. C.M.H.C. or G.E.M.I. provide mortgage insurance against non-payment. You pay the C.M.H.C. or G.E.M.I. application fees and the mortgage insurance premium (up to as much as 3.75% of the loan).

Interest Rate: The value charged by the lender for the use of the lender's money. Expressed as a percentage (ex: 10.5%) and typically compounded semi-annually (twice per year).

Land Transfer Tax: A fee paid to the Ontario government for the transferring of property from seller to buyer.

Market Value: What a buyer is likely to pay, in today's market, based on recent sales and available alternative options.

Maturity Date: The end of the term of your mortgage, at which time you can pay it off or renew it.

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.

Mortgage Life Insurance: Inexpensive insurance coverage on your life, and will pay off the outstanding mortgage balance owing, to a maximum of $350,000, in the event of your death.

Open Mortgage: Allows repayment of the principal, in part or in full, at any time without penalty. Open mortgages tend to be for a short term - usually 6 months or one year.

Portable Mortgage: If you buy another home, this feature allows you to bring your existing mortgage with you (subject to property and financial considerations). This is a great way to avoid pre-payment penalties and benefit if rates have increased since your original mortgage was negotiated.

Pre-Approved Mortgage: This allows you to sit down with your mortgage representative and become fully approved for your mortgage. When you are pre-approved, no financing condition is required in your Agreement of Purchase and Sale. This is not ot be confused with Pre-Qualification.

Prepayment Privileges: Many mortgages allow you to prepay at various times during the term of your loan. These prepayments are applied directly to the principal and can significantly reduce the time to pay off your loan.

Pre-Qualified for a Mortgage: A pre-qualification for a mortgage can be done very quickly, even over the phone. Often there are no forms to fill out or papers to sign. The mortgage representative will take down some basic information and tell you what you can afford. They have not, however, taken the next step of investigating your credit, conditions of employment, or other items which can hinder the final approval. You must still insert a financing condion in your Agreement of Purchase and Sale.

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: Re-negotiation of a mortgage loan at the end of a term, for a new term, with the same lender.

Second Mortgage: Additional financing. Usually has a shorter term and a higher interest rate than the first mortgage.

Term of the Mortgage: The length of time the interest rate is fixed. At the end of the term the mortgage must be either paid off or renewed for another term.

Title: Legal ownership in a property.

Variable Rate Mortgage: A mortgage with fixed payments, but fluxuates with interest rates. The changing interest rate determines how much of the payment goes toward principal.

Vendor Take-Back Mortgage.: When the seller provides some or all of the mortgage financing in order to sell their property.

Have a question about a real estate term, phrase or an expression that you can't find here? Send it to us and we'll let you know what it means...

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Chris Hoare, Sales Representative & Anita Hoare, Broker
Royal Lepage Performance Realty, Brokerage
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