AMORTIZATION PERIOD
The time required to pay a mortgage loan in full, assuming the interest rate remains constant.

APPRAISAL
The process through which the value of the property is determined for a mortgage. The lending value may or may not match the purchase price.

ASSUMPTION AGREEMENT
A legal document signed by a home buyer requiring the home buyer to assume responsibility for the obligations of a mortgage.

BUILDING PERMIT
Acertificate obtained from the municipality befor a building can be erected or repaired.

CLOSED MORTGAGE
A mortgage agreement which does not provide for prepayment.

CLOSING DATE
Date on which the sale of the property becomes final and title passes to the purchaser.

CONVENTIONAL MORTGAGE
A mortgage with a value of 75% or less of a house sale.

DEFAULT
Failure to repay as agreed.

DISCHARGE
To remove an encumbrance from a title.

DOWN PAYMENT
The amount of money put forward by the purchaser from his own resources.

EASEMENT
A right acquired for access to or over another person's land for a specific purpose.

ENCUMBRANCE
A registered claim against a property such as a mortgage.

EQUITY
The owner's interest in a property over and above all claims to the property.

FIRST MORTGAGE
The mortgage agreement which has first claim on the asset.

FORECLOSURE
A legal procedure through which the lender may obtain ownership of the property if the borrower defaults.

GROSS DEBT SERVICE RATIO (GDS)
The percentage of the borrower's gross income that will be used for monthly payments of principal, interest, taxes, half of condo fees and heating costs.

HOLDBACK
The amount of money withheld by the lender during the progress of construction.

INSURED MORTGAGE LOAN
A mortgage loan with usually more than 75% of value, where the lender must have the mortgage insured.

CONSTRUCTION (MECHANIC'S LIEN)
A claim against a property for money owing. A lien has a limited life that varies from province to province and may be filed by a supplier or subcontractor who has provided materials and has not received payment for them.

MORTGAGE
Security for a loan on property owned.

MORTGAGEE
The lender who provides the mortgage funds.

MORTGAGOR
The borrower who pledges his property as security for a loan.

MORTGAGE INSURANCE PREMIUM
A premium that is charged to the borrower to insure the mortgage lender against loss in case of default.

MORTGAGE PREPAYMENT CLAUSE
A clause in the mortgage document which allows the borrower to repay the mortgage in full or in part before the specified date on the mortgage document.

NATIONAL HOUSING ACT APPROVAL
Your guarantee that a lending institution is authorized as such by the federal government under the terms of the National Housing Act.

OFFER TO PURCHASE
A written contract stating the terms under which the buyer agrees to buy. When accepted by the vendor, it forms a legal contract.

OPTION AGREEMENT
A document which stipulates that in exchange for a deposit, an individual is to be given first chance to buy a property within a certain time period.

P.I.T.
Principal, interest and taxes due on a monthly mortgage.

P.I.T.H.
Principal, interest, taxes and heating costs used in calculating the amount a borrower can afford to arrive at a gross debt service ratio.

POSSESSION DATE
The date on which the purchaser expects to move into the new house subject to existing tenancies.

ROLL-OVER MORTGAGE
A mortgage loan where the interest rate is established for a specific term, usually between one and five years, but at the end of the term, the mortgage is said to "roll-over".

SECOND MORTGAGE
A mortgage loan granted when there is already one against the property.