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Acceleration
Clause
A
clause in the mortgage document that accelerates the maturity
date of the mortgage; the clause states that upon default,
the principal sum of the mortgage and accrued interest
is
due.
Accrued
Interest
Interest
that has accumulated unpaid since the last payment date.
Add-On
Interest
Interest
amount that is added to the principal of a debt and made
payable as part of the debt, usually in equal periodic
installments.
Adjustable
Rate Mortgage (ARM)
A
mortgage where the interest rate is adjusted periodically
according to movements in a pre-selected index such as the
Bank of Canada Prime Rate.
Adjustments
on Closing
Two
types of adjustments that a buyer can be charged on closing
are:
Affidavit [back to top]
A
statement of declaration in writing and sworn or affirmed
before an authorized individual.
Agency [back to top]
A
relationship which arises out of a contract where an agent
is authorized by a principal to engage in certain acts,
e.g. dealing with one or more third parties.
Agency
Law [back to top]
This
type of law defines the underlying working relationship in
real estate. Note that this is not legislation or a statute;
agency law is common law or case law based on accumulated
judgements from court cases.
Agent [back to top]
An
individual or corporation licensed by the provincial government
to trade in real estate.
Agreement
Of Purchase And Sale [back to top]
A
written contract to buy property in which the purchaser
and vendor agree to sell upon terms and conditions set
forth in the agreement.
Amortization [back to top]
The
paying down of the principal balance of the mortgage by
equal periodic payments (and occasional extra payments)
of principal at regular intervals over a target period
of time (typically 25 years).
Amortization
of a Mortgage [back to top]
The
gradual retirement of a mortgage by periodic payments of
the principal.
Amortization
Period [back to top]
The
period of time required to retire a mortgage through periodic
payments the principal.
Appraisal [back to top]
An
estimate of the current value of the 'subject property'
for the lender using (1) a market value comparison approach,
which comparing recent sales of similar properties and adding
and subtracting the differences in value of the same features
in the subject property, or
(2) the "depreciated cost" approach, whereby the land value
is estimated and added to an estimate of the depreciated
building value.
Appraised
Value [back to top]
An
estimate of property value written by a qualified individual
- usually for for mortgage lending purposes (note that an
appraisal may not reflect the market value of the property
or the purchase price).
Annual
Percentage Rate (APR) [back to top]
The
yearly interest percentage of a mortgage expressed by the
actual rate of interest paid, given the term, rate, amount
and cost of arrangement.
Arrears [back to top]
To
be in arrears is to be behind in the payments called for
as part of the mortgage agreement.
Assessment [back to top]
An "assessment" is the value of
a property that is a historical, static estimate of the
value of a property used by municipal
governments as a basis for calculating annual property
taxes.
Assessment
Notice [back to top]
An "assessment notice" contains the "assessed value" and is
used to calculate the property taxes for the year (property
taxes = assessed value * current "mill rate").
Assessed
Value [back to top]
An
amount assigned to taxable property for the purpose of
calculating property taxation.
Assignee [back to top]
One
who takes the rights or title of another by assignment.
Assignment of Interest [back to top]
Most Provinces allow a legal assignment of interest in a mortgage to have full legal effect without first having to discharge and recreate the existing mortgage.
This is particularly useful in (1) a mortgage switch, where the costs of transferring lenders could be very high, and (2) second mortgage, where a postponement may be difficult to obtain.
Assignment
of Mortgage [back to top]
The
assignment of a mortgagee's interest in the mortgage to
a different mortgagee.
Assignment
of Rent [back to top]
The
redirection of rental income to a mortgagee (usually in
the event of default).
Assignor [back to top]
One
who transfers or assigns the rights or title to another.
Assumable
Mortgage [back to top]
The
type of mortgage where a qualified buyer can take over
a mortgage from the current owner upon the sale of a property.
If
a buyer can assume a mortgage, they may do so at a below
market interest rate in addition to saving on the legal
costs of creating and registering a new mortgage.
" Assumption"
of a mortgage entails a simple amendment to the mortgage
document registered on title (refer to "switch").
Assumption
Agreement [back to top]
A
document that obligates someone other than the mortgagor
to complete the mortgage obligations.
Assumption
of a Mortgage [back to top]
The
action taken by a purchaser who is responsible for a mortgage
debt through a legal agreement; the original covenantor(s)
responsibility pursuant to the mortgage obligation remains
intact in such arrangement unless it has released by the
mortgagee. See
Release of Contract.
Authority [back to top]
The
legal right given by a principal to an agent to act on the
principal's behalf while performing specific acts, e.g.
negotiations.
Balance
Due On Completion [back to top]
The
amount of money the purchaser has to pay to the vendor
to complete the purchase after all adjustments have been
made.
Balloon
Payment [back to top]
The
final mortgage payment at the end of the term that pays
the outstanding loan in full.
Blended
Payment [back to top]
Payments
that consist of equal amounts of principal and interest
paid at regular intervals during the term of the mortgage.
Blend
and Extend [back to top]
A
closed mortgage that can be "opened" for the purpose of
extending the term; many lenders will blend the penalty
for breaking the mortgage (usually an interest rate differential,
or IRD) with the rate for the new extended term.
The main idea of the "blend and extend" is to enable the mortgagee to obtain a lower rate and protect against future mortgage rate increases.
Breach
of Contract [back to top]
Failure
to fulfill an obligation under a contract; breaching confers
a right of action on the party whose rights under the contract
have been breached.
Bridge
Financing [back to top]
A
loan required by a builder so as to obtain funds during
the period between a permanent commitment and a construction
loan.The
lender will usually require a permanent mortgage commitment
to the full amount of the construction loan plus a hold
back provision that states that only the floor amount will
be funded at the completion of construction.
Broker [back to top]
An
individual with a "broker" designation may establish a sole
proprietor practice or set up a corporation called a brokerage.
For brokers, the corporation becomes the agent or broker
and
the individual is considered a registered real estate salesperson
employed by the corporation. When you list your property
or
sign a buyer agency agreement, you enter into a contract
with the brokerage, not the salesperson.
Building
Codes [back to top]
Regulations
established at the municipal, provincial or federal government
level to provide structural requirements for building construction.
Buy-down [back to top]
Buy-down
is a payment to the lender at the time of funding for purposes
of reducing the interest rate during the term of the mortgage;
often used as marketing features by new home builders, particularly
on high ratio second mortgages.
Buyer's
Agent [back to top]
A
Realtor who is engaged contractually to act on behalf of
the buyer or seller. In most cases, the Realtor acts on
behalf of the sellers and is paid out of the proceeds of
the sale. A
Buyer's Agency Agreement allows a Realtor (with full disclosure
to the sellers or their agent) to negotiate on behalf of
the buyer with no legal conflict of interest. In this case,
the seller still pays the Buyer's Agent fees but this is
always specified in the agreement and acknowledged in the
Offer to Purchase.
Cap
Rate [back to top]
The
highest rate that a borrower will pay within a defined
time period. Examples
of the cap rate are (1) the rate stated on the commitment
letter or mortgage pre-qualification for the maximum rate
that will be paid by the borrower during the term of a protected
variable rate mortgage.
Capitalization
Rate [back to top]
This
is the rate of return an investor hopes to achieve through
investment in a property.
Capitalized
Value [back to top]
The
value of a property based on the net income.
Caveat
Emptor [back to top]
A
Latin statement whose translation is "Let the buyer beware".
In terms of purchasing a home or property, a buyer must fully
examine all aspects of the transaction before agreeing to
the purchase.
Certificate
of Title [back to top]
The
sequence of conveyances and encumbrances that affects a
title to land, from the time of the original patent or as
far back as records are available.
Charge [back to top]
The
name applied to a mortgage document when title is registered
under the Land Titles Act. A
"charge on title" is any encumbrance or claim that affects
title to property.
Chattel
Mortgage [back to top]
An
encumbrance that is against moveable possessions or personal
property ("chattels") that may be removed without damaging
to the property.
Closed
Mortgage [back to top]
A
mortgage whose terms state that it cannot be paid out,
even with a penalty, unless the lender agrees.
Note
that in some cases, a closed mortgage may be paid for in
full but at a defined cost such as the interest rate differential
(IRD) or sometimes with a punitive penalty such as full
interest to maturity.
Closing [back to top]
The
final exchange of consideration and legal documents completed
at the endo of a house purchase or mortgage registration
(or both) transaction.
CMHC [back to top]
The
Canada Mortgage and Housing Corporation (CMHC) is a Canadian
federal government crown corporation which administers the
National Housing Act. One
of the services provided by CMHC is the insuring of high
ratio mortgage loans for lenders.
Collateral
Mortgage [back to top]
A
mortgage where a promissory note is used to securee the
loan.
Collateral
Security [back to top]
A
form of security that one pledges as a way to reduce
the risk of a mortgagee.
Commitment
Letter [back to top]
A
written letter from the lender stating that they will lend
mortgage funds to a specified borrower (or borrowers) as
long as certain conditions are met within a specified period
of time period before the closing date. A key component
of the commitment is the "rate hold" - this is where a lender
may put a "cap" on the mortgage rate for a defined period
of time (e.g. 60 days or 90 days), particularly in a period
of volatile interest rates. For new homes, commitments
on
financing may have longer closing dates and can be negotiated
between the lender and the builder and be held for as long
as 6 months or even a year.
Completion
Date [back to top]
The
date on which your purchase will complete and money will change
hands between you and the sellers.
Completion
Loan [back to top]
A
mortgage loan granted following the satisfactory completion
of construction or repairs.
Compliance
Letter [back to top]
A
compliance letter may be required in some municipalities
before a property transfer can take place. This letter acknowledges
that a property either is clear of outstanding work-orders
such as those that specify clean-up or repair requirements
that
an owner must complete before a transfer of ownership.
Compound
Interest [back to top]
Interest
on both the principal and interest that has accrued.
Condition
Precedent [back to top]
An
event or action necessary before an agreement becomes binding;
also known as a "subject clause".
Condition
Subsequent [back to top]
A
condition referring to a future event upon which the contract
is no longer binding on the parties.
Condominium [back to top]
The
ownership of separate space within in a multiple dwelling
or other multiple-ownership of common elements that are
used jointly among other owners.
Connection
Charges [back to top]
Charges
that utility companies charge a fee on closing to connect
new buyers to their services.
Consideration [back to top]
An
item of value given to make a promise of repayment enforceable.
Construction
Advance [back to top]
A
sum of money advanced to the borrower in the form of a
construction loan.
Construction
Lien [back to top]
A
claim against property that is pursuant to labour, services,
or materials supplied.
Construction
Loan [back to top]
A
mortgage that is advanced in pre-determined stages, according
to the amount of work completed, for a construction or building
project.
Construction
Loan Agreement [back to top]
An
agreement set between a builder and lender that establishes
the terms of an agreement (the loan amount, rate, method
of drawing funds, conditions for advancing).
Contract [back to top]
An
agreement between two or more parties given receipt of
lawful consideration to do or refrain from doing some act.
Conveyance [back to top]
A
written agreement used for the transfer of mortgage, charges,
or leases etc.
Conventional
Mortgage [back to top]
A
mortgage usually amounting to 75% Loan to Value ratio (or
less) of the property value.
Convertible
Mortgage [back to top]
The
type of mortgage whereby one converts their mortgage to
a new one of longer term while it is still in effect.
Covenant [back to top]
An
agreement contained within a mortgage document that creates
an obligation; the agreement may be positive, i.e. it stipulates
the performance of certain acts, or it may be negative or
restrictive, i.e. it forbidds the commission of certain
acts.
Credit
Report [back to top]
A
report, available from at a credit bureau, that specifies
an individual's payment history. Anyone
who wishes to obtain a credit report can order a copy of
their report by contacting their local credit bureau.
Damages [back
to top]
Compensation
or indemnity for loss owing to breach of contract.
Date
of Completion [back to top]
The
date specified by an agreement of purchase and sale, when
the purchaser is to deliver the balance of money due and
the vendor to deliver a duly executed deed.
Debt
Service [back to top]
The
amount of principal and interest payments made under
a mortgage.
Default [back to top]
Failure
to fulfill an obligation; failure to make monthly mortgage
payments as agreed, or to meet certain other terms of
a mortgage agreement.
Deferred
Income [back to top]
An
accounting method of dealing with income that is received
but not included in a statement of earnings as normal
earnings.
Deficiency [back to top]
An
insufficient payment, often relating to an amount recovered
under a power of sale or foreclosure action.
Demand
Note [back to top]
Payment
is made on demand, usually within a few days notice to
the borrower.
Deposit [back to top]
Payment
of money or other valuable consideration as pledge for
fulfillment of contract.
Depreciated
Reproduction Cost [back to top]
Appraisal
method by which the cost of replacing a structure, minus
depreciation, gives the depreciation reproduction costs.
Depreciation [back to top]
A
loss in value due to any cause.
Discharge
of Mortgage [back to top]
A
document executed by the mortgagee, and given to the
mortgagor when a mortgage loan has been repaid in full
before, at,
or after the maturity date.
Disclosure
Statement [back to top]
A
statement contained in a consumer credit transaction
in order to disclose complete credit terms and interest
rates.
Discount [back to top]
Reduction
in product price or cost of a service. A discount if
the difference between the nominal face value of a
loan and
actual cash received by the borrower because interest
is paid at the beginning of a loan based on the sum
to be repaid at maturity.
Discounted
Cashflow Analysis [back to top]
This
is a method of analysis that calculates the true value
of an investment in terms of the present value, i.e. what
the investment ifs worth now, although it is spread over
a number of years. To compensate for future earnings a
discount factor is added in so that a real comparison
can be made between an investment with quick return and
one that is placed over a number of years.
Discounted
Loan [back to top]
The
face value of the loan minus the interest or discount
charged by the lender is the amount actually advanced
to a borrower.
Dominant
Tenement [back to top]
The
estate which derives benefit from an easement over a
subservient estate, as in a Right-of-Way.
Double-Up [back to top]
This
feature (not offered by all lenders) allows you to double
up your mortgage payments anytime without penalty. This
feature is often associated with the ability to "skip"
an equivalent number of payments. This can be used either
to accelerate the pay-off of a mortgage (as it is an enhanced
prepayment privilege) or to manage a volatile cash flow.
For example, commission-based individuals such as Realtors
could "double-up" with each commission cheque, and "skip" during
low cash flow periods.
Dower
Interest [back to top]
A
wife's interest in the lands of her husband accruing
to her by virtue of the marriage.
Down
Payment [back to top]
The
amount of cash paid towards the purchase transaction
by the buyer of a home. This is also known as the purchaser's
initial "equity" in the property, but is used by a lender
to judge the personal commitment to the property. For
example, a lender considers that, if a buyer saved the
down payment, or received it as a gift from a loved one,
they will be far more committed to maintaining the property
value and making the mortgage payments than if they acquired
it for "no money down".
Downside
Leverage [back to top]
Occurs
where the debt service on a mortgage exceeds the yield
on an investors' property, thereby reducing cash flow.
Drawee [back to top]
The
person, bank, or corporation on whom a bill, note or
cheque is drawn from and from whom payment is expected
by the
payee or his assignee.
Drawer [back to top]
The
person or corporation who writes a cheque or note for
payment to a third party. In the case of a bill of exchange,
the drawer is the creditor and is usually the payee.
Easement [back
to top]
The
right acquired for access over another person's land
for a specific purpose, e.g that to build a driveway,
fence,
wall, or public utilities.
Economic
Depreciation [back to top]
Loss
in value of property due to influences related to the
property or those not controlled by the owner.
Effective
Gross Income [back to top]
The
estimated gross income minus allowances for rent and
vacancies losses.
Effective
Interest Rate [back to top]
The
actual interest rate on investment where a debt or loan
was bought at discount or at a premium.
Encroachment [back to top]
Some
type of fixture, e.g. wall or fence, which illegally
intrudes onto or invades on public or private property
diminishing
the size and value of the invaded property.
Encumbrance [back to top]
The
outstanding claim or lien recorded against property,
or any legal right for use of the property by another
person
who is not the owner.
End
Loan [back to top]
The
mortgage loan to the final customer such as a purchaser
of a condominium unit.
Equitable
Mortgage [back to top]
The
transfer of equity in property as security for a debt;
any mortgage registered after the first mortgage can
be
an equitable mortgage business.
Equity [back to top]
The
difference between the value for which one can sell their
property and what is owed against it.
Equity
of Redemption [back to top]
The
right whereby a mortgagor may reclaim clear title to
the real property upon full repayment of the debt.
Escheat [back to top]
The
reversion of property to the state in event the owner
dies and has left no will and having no legally qualified
heir(s) to whom the property may pass by lawful decree.
Estate [back to top]
The
degree, extent, nature or quantity of interest which
a person has in real property.
Estoppel
Certificate [back to top]
A
written statement or certificate which states certain
facts upon which the receiver of the statement or a third
party may rely. For example, a lender's estoppel statement
as to a purchaser or property: this states that a lender
cannot later deny the truth of these statements because
a third party has relied and acted upon them.
Exact
Day Interest [back to top]
Interest
calculated on the basis of 365 days per year or by 366
days when it is a leap year.
Exculpatory
Clause [back to top]
A
clause which removes one party from personal liability
in the event of a default.
Expropriation [back to top]
The
act of forcefully taking private property for public
use.
Extension
Agreement [back to top]
The
lengthening of a term on a contract to (1) extend the
maturity date, (2) permit more time for the performance
of an obligation or condition, or (3) extend the coverage
of a lien to include more property.
Feasibility
Analysis [back to top]
An
analysis to determine the feasibility of a project. Details
of construction costs, projected income from the project
plus location and economic factors affecting the project
will be required. Similar to a feasibility study by a
developer conducted to decide whether to proceed with
plans and required by the lender to decide whether to
provide funds.
Fee
Simple [back to top]
The
highest estate or absolute right in real property.
Financing
Statement [back to top]
A
statement filed by a creditor in a public records office
identifying the parties, giving their addresses, and describing
the collateral.
First
Mortgage [back to top]
Gives
the lender a primary lien/charge against your house and
property which has precedence over all other mortgages.
Priority is determined by the date and time registered,
so a first mortgage was literally and legally registered "first". A new first mortgage can therefore only be registered
as a "first" mortgage upon the discharge of an existing
one if the holder of a second mortgage "postpones" (i.e.,
"puts back in time") to a time immediately following
the registration of the new first mortgage.
First
Mortgage Bond [back to top]
Bonds
issued by a corporation secured upon the property and
earnings of the issuing corporation.
Five-Percent
Down Program [back to top]
This
allows buyers to obtain up to 95% financing on properties
up to a certain value. The loan must be insured against
default by CMHC (Canada Mortgage and Housing Corporation)
or GE Capital Mortgage Insurance Corporation. This maximum
home value will vary according to location (local Realtors
should know the applicable limit) and eligibility can
vary with personal circumstances.
Fixed
Rate Mortgage [back to top]
This
is the usual form of mortgage where interest rate remains
the same during the entire life of the loan.
Fixtures [back to top]
Permanent
improvements to property that may not be removed at the
expiration of the term of lease or tenure.
Floating
Rate of Interest [back to top]
Rate
of interest which fluctuates according to prime lending
rates, eg. 2% above prime rate usually chargeable on short
term loans such as construction loans.
Floor
to Ceiling Loan [back to top]
A
permanent loan or advance made in two stages, (a) on
completion of construction according to agreed upon terms
and conditions,
and (b) the balance advanced upon occupancy or upon cash
flow requirements.
Foreclosure [back to top]
Remedial
court action taken by a mortgagee when default occurs
on a mortgage, to cause forfeiture of the equity of redemption
of the mortgagor.
Freehold [back to top]
The
ownership of a tract of land on which the building(s)
are located. The oldest and most common typed of ownership
of real estate.
Fully
Amortized Loan [back to top]
A
mortgage loan wherein the stipulated repayments repay
the loan in full by its maturity date.
Further
Charge [back to top]
A second or subsequent loan of money to a mortgagor by
a mortgagee, either on the same or on an additional security.
GE
Capitol [back to top]
The
General Electric Capitol Corporation - Canada's only private
default mortgage insurer - insures high ratio mortgages
for lenders.
Graduated
Amortization Mortgage [back to top]
A
method of repayment of a mortgage where payments in the
initial period are low and are gradually later increased
to a higher rate.
Grant [back to top]
A
term used in deeds of conveyance to indicate a transfer
of an interest or estate in land.
Grantee [back to top]
The
party to whom an interest in real property is conveyed
(the "buyer").
Grantor [back to top]
The
person who conveys an interest in real estate by deed (the "seller").
Gross
Debt Service Ratio (GDSR) [back to top]
The
percentage arrived at by dividing your monthly shelter costs
(principal, interest, property taxes, heating and half of
condominium fees if applicable) by your gross monthly income
and multiplying by 100. This calculation is used by all
lenders as a yardstick by which they can measure the ability
of a borrower (or borrowers) to make mortgage payments.
Most lenders set a threshold of 32% for this ratio, while
other lenders may allow higher limits; 32% is also the maximum
qualifying GDS for most default insurance applications.
Gross
Income [back to top]
The
scheduled income from the operation of the business of
the management of the property, customarily stated on an
annual
basis. Income before deductions for tax or expenses.
Gross
Rent Multiplier [back to top]
An
appraisal method where the fair market value of property
is calculated by multiplying the gross rents by a factor
which varies according to the type and location of the
property.
Guaranteed
Income Mortgage [back to top]
A
guarantee included in the purchase money (by a seller-mortgagee)
that there will be a minimum cash-flow or net operating
income to the purchaser mortgagee (this type mortgage is
limited in duration and may be combined with a management
contract where the seller agrees to manage and operate the
property).
Guarantor [back to top]
A
guarantor is a third party who has no interest in a property
but agrees to assume responsibility for a debt in the event
of default by the mortgagor.
Hedge [back to
top]
A
complex money market instrument whose purpose of is to insure
a mortgage lender (or borrower, through a protected or split-term
mortgage) against interest rate movements. In the case of
lenders, the price of this insurance will vary depending
upon many different factors, but will generally be lower
when interest rates and the economy are less volatile. Conversely,
the buyer can hedge at no cost, or at a reasonable rate
premium, by using specifically designed products.
High-Ratio
Mortgage [back to top]
A
mortgage where the Loan To Value ratio is greater than 75%
of the value of the property; this type of mortgage normally
requires the mortgagee tp purchase insurance to ensure the
lender is protected against default.
Hold
Back [back to top]
An
amount of money retained by a construction lender or owner
until satisfactory completion of the work performed by a
contractor.
Home
Inspection Report [back to top]
A
report commissioned by a property owner or purchaser, usually
to verify the condition of a property prior to the "firming
up" of a Real Estate transaction. The scope and detail
may vary, but most reports indicate the specific problem
and
the cost to repair. Unfortunately, no licensing is required,
and this service is not specifically regulated other than
by general consumer protection legislation. The best safeguard
against inadequate work is to ask for the resume of the
Inspector, and if possible check references from previous
customers.
Immediate
Participation Loan [back to top]
A
loan where all partners contribute their share immediately.
Income
Property Loan [back to top]
A
loan that is secured on property which already has a source
of income (e.g. rent); the loan is used to cover the debt
service payments on the loan.
Income/Expense
Ratio [back to top]
The
ratio of operational expenses to gross income, expressed
as a percentage.
Indenture [back to top]
A
document of deed expressing certain issues, agreements
or issues between the parties.
Injunction [back to top]
A
judicial process or order requiring a person to whom it
is directed to do or refrain from performing a particular
act.
Instrument [back to top]
A
written legal document.
Insurable
Value [back to top]
Insurable
Value is used to designate the amount of insurance which
may be carried on destructible portions of a property to
indemnify the owner in the event of loss.
Inter-Alia
Mortgage [back to top]
A
single registered document that encumbers multiple properties.
Interest
Adjustment Date [back to top]
A
date from which interest on a mortgage advanced is calculated
for regular payments. The IA date is usually one payment
period before regular mortgage payments begin, as interest
payable is due from the date a mortgage is advanced.
Interest
Escalation [back to top]
Rate
of interest on a loan is raised periodically during the
term of the loan.
Interest
Only Loan [back to top]
Where
the borrower pays back only the interest on the loan and
there is no amortization until the end of the term. An "interest-only
loan" may be used when a purchaser wishes to resell property
after a short period or if they wish to accumulate enough
income from the property before amortization.
Interest
Rate [back to top]
The
profit of a loan calculated on a percentage basis.
Interest
Rate Differential [back to top]
A
penalty for early prepayment of all or part of a mortgage
outside of its normal prepayment terms. Normally this is
calculated as the difference between the existing rate and
the rate for the term remaining, multiplied by the principal
outstanding and the balance of the term.
Example:
To calculate the IRD, given
1. $175,000 mortgage at 8.75% with 24 months remaining.
2. Current 2 year rate is 6.25%.
3. Differential is 2.5% per annum.
4. IRD is $175,000 * 2 years * 2.5% p.a. = $8750.
Interim
Financing [back to top]
Interim
loans are a short-term means of bridging the gap between
the construction loan and the permanent loan (hence they
are known as "bridge" loans) .
Intestate [back to top]
A
person who dies without a will, or leaves one which is
defective, in which case the estate descends (by operation
of law)
to the next of kin.
Irrevocable [back to top]
Incapable
of being recalled or revoked, unchangeable or unalterable.
Joint
and Several Note [back to top]
A
promissory note in which there are two or more promisors
who are jointly liable.
Joint
Tenancy [back to top]
Ownership
of land by two or more persons where, on the death of one,
the survivor or survivors take the whole estate.
Land
Acquisition Loan [back to top]
A
loan advanced to acquire land as opposed to one acquired
for land or buildings improvements.
Land
Contract [back to top]
A
contract drawn between a seller and buyer for the sale
of property.
Land
Development Loan [back to top]
A
loan advanced for the purpose of residential land development.
Land
Transfer Tax [back to top]
A
tax payable to the crown (usually the provincial government)
by the purchaser upon the transfer of title from a seller.
Leasehold [back to top]
A
type of interest in a property that is granted for a specified
period of time as stated in the contract.
Leasehold Appraisal [back to
top]
A
method of estimating the value of leasehold property.
Leasehold
Mortgage [back to top]
A
mortgage given by a lessee on the security of the leasehold
interest in the land.
Legal
Description [back to top]
A
written description by which property can be locatedfor
purposes pf registration in a land registry system.
Legal
Mortgage [back to top]
The
transfer of a legal estate or interest in property for
the purpose of securing the repayment of a debt.
Lending
Value [back to top]
An
independent appraiser's value interpreted by the lender
as to the worth of a property in the current market given
a reasonable time period to sell the property.
Lessee [back to top]
The
tenant under a lease.
Lessee
Interest [back to top]
The
market value of property less the value of the leassor's
interest.
Lessor [back to top]
The
person who grants the use of the property under lease to
a tenant.
Letter
of Commitment [back to top]
A
letter written by a lender that states the amount of the
loan, specified interest rate, term of loan, and other specific
conditions.
Letter
of Credit [back to top]
The
letter issued by a bank or lending institution that promises
payment to a third party in accordance with the terms of
the agreement. For example, letters of credit may be used
in situations where a deposit is required or as security.
Leverage [back to top]
In
real estate terms, upside leverage occurs when the yield
or net return on property exceeds the debt service for
a
loan. Conversly, downside leverage occurs when the debt
service is greater than the net return on investment.
Lien [back to top]
A
lien is a claim made against a property for the payment
of a debt or obligation related to the property or its owners.
Lien
Hold Back [back to top]
A
percentage of the contract price, or estimated cost of
work to be done, that is held back from a mortgage advance.
Line
of Credit [back to top]
A
maximum credit limit allowed by a bank to a borrower, provided
the borrower maintains an acceptable balance on account
or has a good credit rating (the line of credit may vary
according to the changing circumstances of the borrower
or the bank).
Loan
Coverage [back to top]
The
ratio of net operating income to debt service; in general,
a loan coverage of 1.3 to considered to be adequate for
a loan to value ratio of 75%.
Loan
Fee [back to top]
A
charge for making a loan in addition to the interest charged
to the borrower.
Loan
Loss Reserve [back to top]
A
reserve shown on a balance sheet as provision for any future
losses in assets.
Loan
Origination [back to top]
Analysis
of loan applications from prospective purchasers to determine
if they meet with requirements upon which the lender may
issue a commitment letter.
Loan
Portfolio Turnover [back to top]
The
average length of time required for the turnover of mortgage
loans until maturity.
Loan
Processing [back to top]
The
process a lender goes through upon application and approval
of a loan; e.g. the procedures completed to finalize and
disburse the loan such as the setting up of files, ordering
of credit reports, verification of employment, bank accounts
etc.
Loan
Ratio [back to top]
The
ratio of the principal amount of the mortgage loan to the
lending value of the property.
Loan-to-Value
Ratio [back to top]
The
percentage of the value of a property for which a mortgage
is required. The LTV ratio is used to determine whether
or not default mortgage insurance is required, and, if so,
the cost of mortgage insurance. For example, given a property
value is $250,000, and the down payment available is $25,000,
the required mortgage is $225,000; therefore, the LTV is
$250,000 / $225,000 or 90%.
Lock-In
Clause [back to top]
A
clause that restricts prepayment of a loan during a specified
period of the mortgage.
Margin
of Safety [back to top]
The
excess of equity at fair market value above the outstanding
amount of the loan.
Matrimonial
Home [back to top]
Any
property in which a person has an interest and that is
or has been occupied by the person and their spouse as the
family residence; matrimonial homes include condominiums,
co-operatives, and leasehold interests.
Maturity
Date [back to top]
The
last day of the term of the mortgage agreement; a mortgage
loan must then be paid in full or the agreement renewed
by this date.
Mortgage [back to top]
The
legal pledge of real estate as security for a loan.
Mortgage
Bond [back to top]
A
bond that is issued by corporations and secured by a mortgage
on their property.
Mortgage
Broker [back to top]
A
registered agent who negotiates with lenders on behalf
of a borrower to obtain the best overall mortgage for that
borrower's circumstances. Mortgage Brokers are particularly
useful in financing "non standard" situations which cannot
be funded by a major national lender. This is possible because
a Mortgage Broker has access to lenders who do not advertise
nationally or operate retail locations.
Mortgage
Commitment [back to top]
A
formal indication by a lending institution that it will
grant a mortgage loan on property, for a specified amount,
based on specified terms.
Mortgage
Debenture [back to top]
A
mortgage debenture is the same as a mortgage bond.
Mortgagee [back to top]
The "lender" of a mortgage loan.
Mortgagee
In Possession [back to top]
A
mortgagee in possession is that where one enters into actual
occupation of, or by obtaining the receipt of the rents
of, the mortgaged premises.
Mortgage
Insurance [back to top]
If
the down payment is less than 25% of the purchase price
of the property, the lender is will require either private
mortgage insurance or public mortgage insurance through
Canada Housing and Mortgage Corporation (CMHC) or GE Capital.
The fee is calculated as a percentage of the mortgage; known
as "default insurance".
Mortgage
Insurance Premium [back to top]
An
insurance premium which is added to the mortgage and paid
by the borrower over the life of the mortgage. The mortgage
insurance insures the lender against loss in case of default
by the borrower.
Mortgage
Life Insurance [back to top]
A
form of insurance recommended for the borrower; in the event
of the death of the owner(s), the insurance pays the balance
owing on the mortgage. The intent of mortgage life insurance
is to protect survivors from losing their home.
Mortgage
Loan [back to top]
An
agreement by which a sum of money is borrowed and a promise
to repay is given by a mortgagor, and as a further security,
the mortgagor gives the mortgagee a conveyance on the property
they own (a promissory note executed in favor of the lender
giving them an encumbrance or lien on the mortgagor's property).
Mortgage
Note [back to top]
A
promissory note executed in favor of the lender giving
him an encumbrance or lien on the borrower's property. The
mortgagor
is usually liable on this type of note.
Mortgage
Portfolio [back to top]
Several
mortgages held by a mortgagee, lender or broker.
Mortgage
Postponement [back to top]
The
process where a mortgagee may permit the mortgagor to renew
or replace an existing mortgage that falls due prior to
the maturity date.
Mortgage
Underwriter [back to top]
A
mortgage lender or broker who approves or turns down loan
applications based upon the quality of the real property,
credit-worthiness and ability to pay according to the guidelines
of the lender with regard to ratio of mortgage loan to value
of property.
Mortgaging
Out [back to top]
A
term used when a mortgage exceeds the current value of
the property on which it is secured.
Mortgagor [back to top]
The
mortgagor is the "borrower".
Multiple
Listing Service (MLS) [back to top]
A
service of a local Real Estate Board which publishes and
exchanges details of properties registered with them. The
majority of properties sold in Canada are sold through the
local MLS.
Municipal Levies [back to top]
A levy charged by a municipality to recover the cost of special services, if these services cannot, for some reason, be funded out of general revenues, or apply primarily to homebuyers (e.g. water meter installation, road and sewer improvements)
Negative
Cash-Flow [back to top]
When
operating costs exceed gross rental income or debts.
Net
Operating Income [back to top]
The
balance remaining after deducting the operating expenses
from gross receipts and gross rental, but not including
the deduction of debt service on mortgages. The "free and
clear return" on property is calculated by the ratio of
NOI to total investment including mortgages and equity.
("free and clear return" gives a direct means of comparing
the return on different properties)
Net
Rate of Interest [back to top]
The
interest rate received by a mortgagee net of the servicing
fee deducted by a loan correspondent, etc.
Net
Worth [back to top]
The
difference between what you own (assets) and what you owe
(liabilities) is called your net worth.
Nominal
Interest Rate [back to top]
The
interest rate stated on the face on a loan document. Note
that if the loan amount is discounted or sold at premium,
the effective rate of interest will either be higher or
lower.
Non-Recourse
Loan [back to top]
A
clause in a loan that waives personal liability of the
borrower on the loan.
Oblatory
Advance [back to top]
An
advance made according to terms of a pre-existing construction
loan agreement or mortgage.
Offer
To Purchase [back to top]
A
written proposal that is either "firm", i.e. it has no conditions,
or "conditional", i.e. certain conditions that have to
ve fulfilled, to purchase real estate that becomes binding
upon acceptance of the vendor.
Open
End Mortgage [back to top]
A
mortgage under which the lender has the option of advancing
more funds where the value of the property is anticipated
to increase.
Open
Mortgage [back to top]
This
enables one to pay back the borrowed funds without notice
or penalty. There are two types of open mortgages:
Open
Or Closed [back to top]
The
restriction or denial of repayment rights until the maturity
of the mortgage is a closed mortgage. For example, if the
mortgage is specified as open, then the mortgagor can pay
extra payments of principal sums at any time or at specified
times with or without repayment penalty.
Operating
Expenses [back to top]
All
expenses, occurring periodically, that are necessary to
produce net income before depreciation; under some conditions
these expenses may be placed in two categories: operating
expenses and fixed charges.
Option [back to top]
A
right give by the owner of property to another, for a consideration,
to buy a certain property within a limited time at an agreed
price.
Order
Absolute [back to top]
Judgement
taken against a mortgagor that extinguishes the equity
of redemption.
Owner [back to top]
The
lawful possessor of the title to real property.
Package
Loan [back to top]
The
combination of two types of loan. For example, a construction
loan and permanent financing (the borrower benefits by only
having to negotiate with a single lender and only having
to pay a single set of closing costs)
Partial
Discharge [back to top]
A
discharge of a definite portion of the mortgage lands given
after the mortgagor has prepaid a specific portion of the
mortgage debt.
Participation
Loan [back to top]
An
agreement whereby two or more lenders share in advancing
a portion of a loan made by the originating or lead bank;
the terms in this type of agreement establish a method of
apportionment and interest rates.
Partnership [back to top]
An
arrangement whereby individuals join together where, in
the beginning a general partner who has the experience
and
the limited partners have the money, in the end the general
partner has the money and the limited partners gain the
experience.
Percent
Paid Off [back to top]
The
percent of principal that is paid off at any given time
under an amortization schedule.
Percentage
Rent Plus Minimum [back to top]
A
percentage rental which must be paid in addition to the
minimum; this is a minimum rent that is not credited against
percentage rent payable.
Percentage
Rental Against Minimum [back to top]
A
rental paid on a percentage lease where rent paid by a
tenant varies according to volume of business. For example,
a percentage
of gross receipts, sales or revenue are paid to the extent
where they exceeds a minimum rental.
Permanent
Financing [back to top]
A
long-term mortgage usually intended to finance both land
and improvements after completion of construction and is
used to pay down a construction loan.
Personal
Covenant [back to top]
A
legally-binding promise made by a borrower to repay the mortgage
including the interest. The "personal" aspect refers to the
lender's right to personally sue the borrower for breach
of
promise or default of the mortgage.
Personal
Liability [back to top]
A
person liable on a debt to the full extent of their entire
assets as opposed to limited liability where a maximum or
a ceiling is fixed on the amount of assets that can be drawn
upon to satisfy a debt.
With personal liability, joint and several liability establishes the liability of each individual borrower for the total debt, joint liability binds all the borrowers together in one action, and several liability fixes the liability of each borrower to the extent of their share of the debt.
Personal
Property [back to top]
All
property except land and the improvements completed for
the land.
Portable
Mortgage [back to top]
A
mortgage which allows one to transfer the amount and terms
over to a new property without cost or penalty. The mortgage
must be registered on title of the new property, therefore
it is not identical in all respects. While most mortgages
have a portability feature, one may require additional money
when transferring the mortgage to the new property.
Postponement
Clause [back to top]
A
mortgage may contain a postponement clause where the mortgagee
permits the borrower to renew or release an existing first
mortgage that falls due prior to the maturity date of the
current mortgage.
Power
of Sale [back to top]
The
right of a mortgagee to force sale of the property without
judicial proceedings should default occur.
Prepayment
Clause [back to top]
A
clause inserted in a mortgage that gives the mortgagor
the privilege of paying off some or all of the mortgage debt
in advance of the maturity date.
Prepayment
Penalty [back to top]
If
one's mortgage is not fully open, they may be charged a
penalty to pay off all or part of the mortgage before the
end of the fixed term. Normally, the prepayment penalty
is the greater of three months' interest or the interest
rate differential (IRD) on the amount to be prepaid. Note
that with CMHC (insured) mortgages, plus a few of the major
lenders, the maximum penalty is set at 3 months interest
after the mortgage has been in effect for three years regardless
of the number of times it has been renewed.
Prepayment
Privilege(s) [back to top]
The
right to periodically repay an amount that is greater than
the scheduled principal payment. This may be limited to
a single annual payment on the anniversary date of no more
than 10% of the original principal.
Pre-Qualification [back to top]
An
interview with a client, generally prior to the writing
of an offer to purchase a property, in order to determine
the applicant's qualifications for obtaining a mortgage.
Prime
Rate [back to top]
The
rate charged by banks to their most credit-worthy borrowers;
this rate is also referred to as the rate of interest paid
on government bonds.
Principal [back to top]
The
amount borrowed for a mortgage.
Principal,
Interest, Taxes, Heating (PITH) [back
to top]
The
principal, interest, taxes, heating and half of any condominium
fees, if applicable. These expenses are known as the "shelter
expenses". The "shelter expenses" are a basic component
of the ratios used to determine whether one qualifies or
not for a mortgage.
Pro
Forma Statement [back to top]
A
financial statement of the gross income, operating costs,
net operating costs and net operating income for a specified
financial period (e.g. one year) using specified assumptions.
Progress
Advances [back to top]
Loan
advances made on a property under construction where a
lender makes advances on the basis of the retention at all
times
of an amount of the loan which, in their opinion, will
be sufficient to complete the building should the construction
fail to be completed.
Projected
Income [back to top]
Estimated
income from a property.
Promissory
Note [back to top]
A
written document that acknowledges a debt and promising
payment.
Property [back to top]
Refers
to the rights which an individual enjoys by virtue of their
ownership.
Purchase-Money
Mortgage [back to top]
A
mortgage loan taken back by the property vendor in lieu
of purchase funds in order to help finance the purchaser.
Real
Estate Representative [back to
top]
A
person (often incorrectly referred to as an "agent") who has
met provincial government criteria for registration as a real
estate salesperson and is employed by a broker to trade in
real estate on behalf of the broker. A Revenue Canada income
tax ruling that created "independent contractor" status for
salespeople, giving them more tax deductions, has left a
false
impression that salespeople are legally independent of their
broker.
Realtor [back to top]
A
registered real estate broker who holds active membership
in a local real estate board and the trademark of the Canadian
Real Estate Association.
Redemption [back to top]
The
buying back of a mortgage estate by payment of the sum
due on the mortgage.
Redemption
Period [back to top]
A
period of time allowed by law where a mortgagor may redeem
their property by discharging the entire debt in arrears.
Refinance [back to top]
To
first discharge a current mortgage and all registered encumbrances
and then arrange a new mortgage.
Registration
Fees [back to top]
Fees
paid to the municipal or provincial government for a title
transfer, mortgage registration or other instrument such
as an assignment or lien.
Registration
and Discharge Dates [back to top]
Dates
of registration by number and date given to the mortgagee.
When the mortgage loan has been paid in full on or after
maturity date, the mortgagee executes the discharge or
cessation of charge and registers same to liquidate the mortgage
which
allows the mortgagor to redeem the mortgage.
Registered
Retirement Savings Plan (RRSP) [back to
top]
An
RRSP is a federal plan that allows a taxpayer to contribute
approximately 18% of earned income tax free - to a maximum
of $13,500 - into a retirement plan. If a taxpayer has already
paid tax on personal income, then the RRSP contribution
can result in a significant tax rebate. Since RRSP's can
be contributed to retroactively, this enables large cash
refunds to get first-time home buyers to take the plunge.
Release
of Charge [back to top]
A
discharge of a mortgage.
Release
of Covenant [back to top]
A
release given to the mortgagor of a property that is sold
to a new purchaser who is acceptable to the mortgagee.
Renewal
Agreement [back to top]
An
agreement where the lender may agree to extend the mortgage
loan, possibly on revised terms as to the repayments of
the principal or interest rate.
Rental
Requirements [back to top]
The
ceiling portion of a permanent loan commitment that is
advanced upon reaching a minimum rental or occupancy rate.
Rental
Value [back to top]
The
monetary amount agreed to for the right to the agreed use
of real estate.
Restriction [back to top]
A
limitation contained in the deed tregarding the use of
property or other written instrument in the title.
Restrictive
Covenant [back to top]
A
restriction in a title to limit or govern the use of the
land.
Rests [back to top]
The
periodical balancing of an account made for the purpose
of converting interest into principal, and charging the
party liable with compound interest.
Return
on Investment [back to top]
Free
and clear return is calculated as the percentage of net
operating income to total investment in the property.
Reversion [back to top]
The
right to repossess and resume the full and sole use and
proprietorship of real property which temporarily has been
alienated by lease, easement or otherwise. Depending on
the terms of the controlling agreement, the reversionary
right becomes effective at a stated time or under certain
conditions such as the termination of a leasehold, abandonment
of a right-of-way, or end of the economic life of the improvements.
Right [back to top]
A
claim or title enforceable by law.
Right
of Survivorship [back to top]
A
distinguishing feature of joint tenancies which provides
the means, where land is held in undivided portions by co-owners,
upon the death of any joint owner, for their interest in
the land to pass to the surviving co-owner rather than
their estate.
Right
of Way [back to top]
The
right to pass over another's land according to the nature
of an easement.
Riparian
Rights [back to top]
Where
the rights of the owners of land on the banks of watercourses
include the use of the water on, under, or adjacent to their
land, including the right to acquire wharves and fish therefrom.
Roll-over
Mortgage [back to top]
A
type of mortgage where the interest rate is established for
a specific period of time. At the end, the mortgage is said
to "roll over" and the lender and borrower may agree to extend
to loan. If satisfactory terms are not be agreed upon, the
lender is entitled to be repaid in full. In this case, the
borrower may seek alternative financing.
Running
With The Land [back to top]
A
covenant is said to "run with the land" when it extends
beyond the original parties to the agreement and binds
all
subsequent owners to either liability to perform it or
the right to take advantage of it.
Sale and Leaseback [back to top]
A method of financing where a property is sold to a purchaser who simultaneously enters into a long-term lease of the property with the vendor. The vendor (now the lessee of the property) remains in possession for the specified term of the lease and covenants to pay the rental to this purchaser (now the lessor of the property) as well as all operation expenses.
Sales
Clause [back to top]
This
is a clause that enables the mortgagee to demand payment
of the outstanding balance including interest upon sale
or transfer of title.
Sales
Hold Back [back to top]
A
percentage of the principal amount of the mortgage held
by the mortgagee until the property in question is sold
to a party satisfactory to the mortgagee.
Second
Mortgage [back to top]
A
mortgage loan granted and registered when there is already
a first mortgage registered on the property.
Set
Back [back to top]
The
distance from the curb or other established line within
which no construction may occur.
Simple
Interest [back to top]
Interest
that is computed only on the principal balance - it is not
compounded by calculating interest payable on accrued interest.
Single
Family Dwelling [back to top]
A
residential property designed for occupancy by one family
that is situated on land zoned specifically for that purpose.
Split
Financing [back to top]
A
device by which lending is split into separate pieces and
treated individually.
Standby
Commitment [back to top]
A
commitment from a mortgage lender to make a loan in a specified
period of time, for specified terms, with the understanding
the borrower will not draw down the funds.
Statement
of Adjustments [back to top]
A
statement that establishes the details of a mortgage transaction.
Statute [back to top]
A
law established by an act of municipal council, or the
provincial or federal legislatures.
Statute
of Frauds [back to top]
A
law which provides which states certain contracts, e.g.
real estate contracts, must be in writing in order to be
enforceable at law.
Statute
of Limitations [back to top]
That
period of time specified within which an action of law
must be brought or else the action is forfeited.
Step-down
Lease [back to top]
A
lease providing decreases in rental payment at specified
dates.
Step-up
Lease [back to top]
Opposite
to step-down lease.
Survivorship [back to top]
The
right of a person to secure ownership by reason of their
outliving another person (or persons) with whom they shared
the undivided interest in the land.
Survey [back to top]
The
legal written and mapped description of the location and
dimensions of a property. The survey should also show the
dimensions and placement on the lot of any structure, including
additions such as pools, sheds and fences. An up-to-date
survey is often required by a lender as part of the mortgage
transaction.
Switch [back to top]
This
is the term almost universally applied to changing lenders
at the end of a term, when the mortgage becomes "open".
Many lenders will now pay all of the costs of a "switch.",
as well as giving them a reduced rate to lure them away
from competitors.
Takeout
Mortgage Loan [back to top]
A
long term mortgage loan that is advanced to borrower on
completion of construction or in compliance with any other
conditions in the loan commitment.
Tax
Certificate [back to top]
At
the time of a sale, the lawyer for the buyer must confirm
that all local taxes have been paid up to date. If they
are, a tax certificate is issued from which any adjustments
can be made - usually requiring the buyer to compensate
the seller for any prepaid taxes. However, if the taxes
are not up to date, the municipality requires that the seller
pay them off from the proceeds of the sale. If there are
insufficient proceeds, then it usually falls on the buyer
to pay them.
Tax
Lien [back to top]
A
lien imposed by a taxing authority on real estate for failure
to pay taxes within the time required by law.
Tenancy
In Common [back to top]
Ownership
by two or more persons; however, unlike joint tenancy,
in that interest the deceased does not pass to the survivor
but is treated as an asset of the deceased's estate.
Term [back to top]
The
length of time which a mortgage agreement covers; payments
made may not repay the outstanding principal by the end
of the term because of a longer amortization period.
Title [back to top]
The
means of evidence by which the owner of land can prove
their ownership.
Title
Insurance [back to top]
A
policy which insures the lender against loss due to a flaw
in the title of property held as collateral for a mortgage,
and thus the mortgage lender against any legal questions
on the title to the real estate or of legal priority of
the mortgagee.
Title
Search [back to top]
An
examination of the title of a property as indicated in
the public records in order to determine the ownership of
the
subject property and the existence of any encumbrances
or defects.
Total
Debt Service Ratio (TDSR) [back to top]
The
percentage of gross annual income required to cover payments
associated with housing and all other debts and obligations.
The Total Debt Service Ratio (TDS) is a percentage calculated
by dividing monthly shelter costs (principal, interest,
property taxes, heating and half of condominium fees if
applicable) PLUS all other monthly debt obligations by the
gross monthly income and multiplying by 100. TDS is used
by all lenders as the upper limit on which to measure the
ability of a borrower to make mortgage payments. Most lenders
require that this ratio be no more than 40% for a particular
application with some as low as 37%; 40% is also the maximum
qualifying TDS in most applications for default insurance.
Transfer [back to top]
To
convey from one person to another.
Transfer
of Title [back to top]
A
document signed by the seller and purchaser transferring
ownership, at which time the document is registered against
the property.
Trust
Account [back to top]
An
account held by an agent on behalf of their principal for
the payment of money due to a third party on the event of
specified incidents. For example, a vendor's lawyer will
hold funds on their behalf until title deeds to property
have been delivered and property registered and the keys
delivered to the purchaser, or an account maintained by
a mortgagee for the payment of property taxes or life insurance
premiums.
Umbrella Mortgage [back to top]
This type of mortgage is also referred to as a "wrap around", which is a special arrangement where one document encompasses one or more already existing mortgages registered on the same property. The mortgagee is responsible for remission of payments to the lender while the mortgagor makes one payment to the mortgagee.
Undertaking [back to top]
This
is a promise made by a lawyer to ensure that certain conditions
of the lender are met after closing, due to time constraints.
For example, to register a discharge of an old first mortgage
after the new one has been registered because there is simply
not enough time to do so at closing. Furthermore, undertaking
also governs such closing activities as releasing funds
before a new mortgage document is officially registered.
Underwriting [back to top]
The
process of deciding whether or not to lend money, or the
amount of the loan, based on information provided to the
lender. Every lender has a different underwriting process
and lending criteria which differ between various lenders.
Valid [back
to top]
Having
binding force & legally sufficient as authorized by
law.
Valuable
Consideration [back to top]
The
granting of a beneficial right, e.g. an interest, profit,
or suffering of some detrimental forbearance, loss or default,
by one party in exchange for the performance of another.
Variable
Rate Mortgage [back to top]
A
mortgage where the interest rate is usually compounded monthly
and fluctuates with the prime rate at the chartered banks.
In most (but not all) cases, a variable rate mortgage is
fully open.
Vendor [back to top]
A
seller of real property.
Vendor
Financing [back to top]
The
seller sometimes takes the mortgage at a rate lower than market
rates. Most of these arrangements are not renewable nor transferable
to the next owner.
Vendor
Take Back Mortgage [back to top]
A
type of mortgage where a vendor of a property takes from
the purchaser as partial payment of the purchase price for
that property.
Verification
of Employment [back to top]
The
lender will sometimes contact an applicant's employer in
order to verify information provided in a mortgage application
or a job letter, e.g. income structure, length of employment,
position.
Void [back to top]
Meaning
literally "of legal effect; a nullity".
Voidable [back to top]
Where
one party to a contract is entitled to rescind the contract
at their discretion.
Waiver [back
to top]
An
international relinquishment of some right or interest,
the renunciation, abandonment, or surrender of some claim.
Witness [back to top]
When
a person places their name to a deed, will or other document
for the purpose of attesting its authenticity and proving
its execution by testifying.
Work
Orders [back to top]
Municipal
by-laws require that residential property be maintained
in a safe and habitable condition, and that a property's
use conform to specific requirements, e.g. no illegal basement
apartments, satellite antenna, etc.
Wrap-Around
Mortgage [back to top]
This
type of mortgage is often erroneously referred to as a "blanket
mortgage". It is a new mortgage, registered on the title,
that includes a prior existing mortgage as the new mortgagee
undertakes the responsibility as mortgagor under the original
mortgage.