Glossary of Terms


A consumer’s capacity to afford a property. Affordability is usually expressed in terms of the maximum price the consumer could pay for a house, and be approved for the mortgage required to pay that amount. Affordability is often calculated based on total debt service ratio (TDS) or gross debt service ratio (GDS).

Agreement of Sale and Purchase

A written agreement between vendor and purchaser in which the purchaser agrees to buy certain real property and the vendor agrees to sell upon terms and conditions as set forth in that agreement.


The gradual retirement of a debt over a certain period of time by means of regular equal payments composed of principal and interest.

Amortization Schedule

A table that shows the mortgage payment, broken down by interest and amortization, the loan balance, tax and insurance payments if made by the lender, and the balance of the tax/insurance escrow account.

Anniversary Date

The date exactly one year from the time interest starts to accrue on a mortgage. That same date in each succeeding year, during the term of the mortgage, is also referred to as the “anniversary date”.

Appraised Value

An estimate of the value of the property (also known as the lending value) offered as security for a mortgage or loan. An appraisal is performed primarily for mortgage lending purposes, and is an estimate of the fair market value or purchase price.


The evaluation of the market value of a property by a professional appraiser. This is often done in connection with a loan and the appraiser is often chosen by the lender. Costs for the appraisal are sometimes paid by the borrower.

Blended Payments

A method of repaying a mortgage where periodic payments of principal and interest are calculated in such a way that the payments remain constant in amount.

Closed Mortgage

A closed mortgage generally offers you a lower rate than a comparable open mortgage. However, it is subject to certain prepayment restrictions.

Closing Costs

Various additional expenses associated with purchasing a home. These costs can include, among other items, legal/notary fees and disbursements, property land transfer taxes, as well as adjustments for prepaid property taxes or condominium strata fees, if any. Some of the closing costs are paid by the buyer and some are paid by the seller. Talk to one of our mortgage specialists for more information.

CMHC or Genworth

The Canada Mortgage and Housing Corporation (CMHC) administers the National Housing Act. CMHC services include the insuring of high ratio mortgages. A high ratio mortgage is one that exceeds 80% of the lending value of the property. Genworth and AIG are currently the only other companies that provide this type of insurance in Canada.

Completion Date

The date on which the money to purchase a property is transferred from the buyers (and buyer’s mortgagees) to the seller, usually via lawyers or notary publics.

Condominium/Strata Ownership

The fee simple ownership of a separate amount of space in a multiple dwelling or other multi-occupancy building with proportioned tenancy in common ownership of common elements used jointly with other owners.

Conventional Mortgage

A first mortgage, outside the jurisdiction of the National Housing Act, granted by an institutional lender (usually a chartered bank, a trust or insurance company) or other organization. A conventional mortgage does not exceed 80% of the lending value (purchase price or appraisal value) of the property. Mortgages that exceed this limit must be insured by CMHC, Genworth or AIG.You must contribute at least 20% of the lending value as a downpayment on the property.

Credit Score

A numerical score, based on an individual’s credit history, that measures that individual’s credit worthiness (i.e. the likelihood of the individual being able to pay off bills in a timely fashion). Credit scores are calculated using computerized algorithms. Credit scores impact the size of the mortgage that you can receive and also whether you will be approved for a mortgage.


Failure of the borrower to follow the terms of a mortgage, usually in relation to very late or non-payment of monthly mortgage payments.


A sum of money deposited in trust by the purchaser when making an offer to be held in trust by the vendor’s agent, broker, lawyer or notary until the closing of the transaction. The deposit is usually done within a short period near the subject removal date.

Discharge of Mortgage

A document executed by the lender and given to the borrower when the mortgage loan has been repaid in full. It is the borrower’s responsibility to have the mortgage discharge registered at Land Titles and pay any fee levied.

Down Payment

The amount of money that a buyer has to put forward initially for the purchase of a home. The size of the mortgage usually is the purchase price minus the down payment.

Early Renewal

A term used to describe the process when you change the term of a mortgage before the maturity date.


It is usually the difference between the market value of the property and any outstanding encumbrances and debts. The interest of the owner in a property over and above all claims against the property. Also, the dollar value an owner of real property has in a piece of real estate after allowing for encumbrances and creditors’ claims.

Fire Insurance

The term is self-explanatory. However, all lenders will require that an adequate amount of fire insurance be obtained for the property and the loss payable firstly to the lender.

First Mortgage

A first mortgage is an agreement which has first claim on the property in the event of default.

First Time Homebuyer

To qualify as a first time homebuyer, you must not have owned a principal residence anywhere in the world and must reside on the property. A disclosure certificate must be signed.

Flexible Payment Options

An opportunity to choose from a number of payment options to fit your family’s needs. Choices usually include monthly, semi-monthly, bi-weekly and weekly.


The legal process by which a lender acquires possession of the property securing a mortgage loan. It occurs when the buyer is in severe default of mortgage payments (i.e. many payments are overdue).

Gross Debt Service (GDS)

The ratio of annual principal, interest, property taxes and estimated heating costs to the gross annual income of the mortgagor.


A third party without interest in the property who agrees to assume responsibility for a debt in the event of default by the mortgagor.

High Ratio Mortgage

A high ratio mortgage is one which exceeds 80% of the lending value of the property. Currently, you can borrow up to 95% of the lending value. However, as a requirement, Mortgage Insurance must be obtained either through CMHC, Genworth or AIG. The Mortgage Insurance premium can be added to the mortgage balance.

Interest Adjustment Date (IAD)

The date on which the mortgage really begins, usually the first of the month. The borrower is required to pay interest on the loan between the date of receiving the funds and the IAD before regular mortgage payments start.

Joint Tenancy

Where two or more persons acquire equal undivided interest in a property, and if one person dies their shares automatically goes to the survivor(s).

Legal Description

A written description by which property can be definitely located, and which is acceptable for registration in a land registry system.


The lender’s right to claim the borrowers’ property, through legal means, in the event of the default by the borrower.

Loan Ratio

The ratio of the principal amount of the loan to the lending value.

Market Value

The highest price which a buyer, willing, but not compelled to buy, would pay, and the lowest a seller, willing, but not compelled to sell, would accept.

Maturity Date

The date on which the balance owing on a mortgage becomes due. The final day of the term of the mortgage.


A conveyance of property to a creditor as security for a payment of a debt with a right of redemption at a specified date.

Mortgage Commitment

A formal indication by a lending institution that it will grant a mortgage loan on a specific property, in a certain specified amount on certain specified terms.


The one to whom property is conveyed as security for the payment of a debt; the lender or creditor.


The one who makes the mortgage; the borrower or debtor.

Open Mortgage

A mortgage which contains a privilege given to the mortgagor permitting him to repay all or part of the principal amount at any given time without notice or penalty.

Portable Mortgage

A mortgage that can be transferred from one property to another.

Prepayment Privileges

A clause inserted in a mortgage which gives the mortgagor the privilege of paying down some of the principal amount in advance of the maturity date. Usually this allows you to make a lump sum payment and/or increase your monthly payment amount at a specific time or interval. The use of these privileges will allow you to pay down the mortgage quicker and potentially save significant costs over the life of the mortgage.

Property Taxes

The amount charged to the owner, usually on an annual basis, by the municipality in which the property is located.


Renegotiating your existing mortgage agreement.

Subject to Clauses

Conditions on a contract of purchase and sale that must be satisfied in order to continue with the purchase and sale process. These clauses must have a date that they need to be satisfied by and must be clear in intention. Common subjects include inspection, financing, review of strata minutes (for condominiums), and review of title.


The accurate mathematical measurement of land and buildings on that land. Also, the blueprint showing the measurements, placement of the building, boundaries and area of land measured. The surveyor’s certificate is a site plan showing where the building is located on the property and any easements or right of ways. The certificate must be signed by a certified/licensed surveyor.

Tenants in Common

Where two or more persons acquire identical or different interests in a property. Each may sell or bequeath their interests, and in the event of death, their interest becomes a part of their estate.


In a mortgage, “term” is the actual length of time for which the money is loaned, at a particular rate of interest.

Total Debt Service

The ratio of the annual mortgage payments such as principal, interest, property taxes and estimated heating costs plus payments on all other debts such as bank loans, car loans, credit card debt, etc. to the annual gross income of the borrower.

Variable Rate

A mortgage that has an interest rate that fluctuates, usually following prevailing market rates.


The seller of real property