Canadian Financial, Real Estate and Mortgage Glossary

Words categorized under Mortgages

principal — Definition (Mortgages, Financial-banking)

The original balance of money lent on an outstanding loan and fees, excluding interest. Also the remaining balance of a loan, excluding interest.

principal and interest (P&I, PI) — Definition (Mortgages, Financial-banking)

Acronym for the elements of a mortgage payment: principal and interest.

principal, interest and taxes (PIT) — Definition (Mortgages, Taxation, Financial-banking)

Principal, interest and taxes. The components of a monthly mortgage payment.

principal, interest, taxes, and insurance (PITI) — Definition (Mortgages, Taxation, Insurance, Financial-banking)

Acronym for the elements of a mortgage payment: principal, interest, taxes and insurance.

private lender — Definition (Mortgages, Financial-banking)

A lender not associated with a traditional lender.

property tax — Definition (Mortgages, Real-estate, Taxation)

A levy by a city on real estate and personal property whose amount varies depending on the property's value.

province of domicile — Definition (Investments, Mortgages, Real-estate, Insurance, Financial-banking, Legal-contracts)

The province where an individual lives or intends to live permanently or for a long term, regardless of the individual's current location.

qualifying rate — Definition (Mortgages, Financial-banking)

The mortgage rate that one must qualify for when applying for a variable rate or a term less than 5 years, so that if rates increase, the borrower can continue to make payments.

qualifying ratios — Definition (Mortgages, Financial-banking)

As calculated by lenders, the percentage of income that is spent on housing debt and combined household debt. The first qualifying ratio, called the gross debt service or GDS is up to and including a maximum of 32% of the combined gross family income. The second qualifying ratio is the Total debt service or TDS is up to and including 40% of gross income.

rate — Definition (Investments, Mortgages, Financial-banking)

Percentage a borrower pays for the use of money, usually expressed as an annual percentage.

rate cap — Definition (Mortgages, Financial-banking)

A limit on how much the interest rate can change, either at each adjustment period or over the life of the loan.

rate hold — Definition (Mortgages, Financial-banking)

The length of time, typically between 60 and 120 days, that a lender will guarantee a loan's interest rate once you are locked in.

rate index — Definition (Mortgages, Financial-banking)

A table of yields or interest rates being paid on debt (such as Treasury notes or bank deposits) that is used to determine interest-rate changes for adjustable-rate mortgages and other variable-rate loans.

rate lock-in — Definition (Mortgages, Financial-banking)

A written agreement in which the lender guarantees the borrower a specified interest rate, provided the loan closes within a set period of time.

ratio — Definition (Mortgages, Financial-banking)

Comparison of two figures used to evaluate business performance, such as debt/equity ratio and return on investment.

real estate attorney — Definition (Mortgages, Real-estate, Taxation, Legal-contracts)

A lawyer who specializes in the transfer of land and buildings and property tax issues.

receivership — Definition (Investments, Mortgages, Financial-banking, Legal-contracts)

A form of bankruptcy where a person is appointed to take control of a company and is responsible for recouping unpaid debts.

reconveyance — Definition (Mortgages, Legal-contracts)

The transfer of title to the borrower after a mortgage has been paid fully.

refinance — Definition (Mortgages, Financial-banking)

To arrange a new loan for an increased amount or better terms whereby the old loan is paid off from the proceeds of the new loan.

refinancing — Definition (Mortgages)

The act of paying off one mortgage with another mortgage to take advantage of lower interest rates. Refinancing is also used to transform equity into cash for vacations, home improvements, or for consolidating debt.

remaining balance — Definition (Mortgages, Financial-banking)

Unpaid principal on a loan.

remaining term — Definition (Mortgages, Financial-banking)

The time it will take to pay off the rest of an instalment loan as scheduled.

renewal — Definition (Mortgages, Financial-banking)

Signing on again with the same lender once a term is up.

rent — Definition (Mortgages, Real-estate, Financial-banking)

When one party pays another for the use of an asset, service or property.

rent-to-own (RTO) — Definition (Mortgages, Real-estate, Financial-banking, Legal-contracts)

An agreement to purchase an asset after a series of rental payments.

rental property (RP) — Definition (Investments, Mortgages, Real-estate, Financial-banking)

Property that is occupied by rent-paying tenants and not the owner.

repayment period — Definition (Mortgages, Financial-banking)

In a home equity line of credit, that portion of the life of the loan that follows the draw period. During the repayment period, the borrower cannot take out any more money, but must pay down the loan.

repayment plan — Definition (Mortgages, Financial-banking)

Modification of an existing loan after the borrower has been delinquent. Often used when the borrower misses payments but the lender does not foreclose.

repossession — Definition (Mortgages, Financial-banking, Legal-contracts)

The taking back of property after a borrower has stopped making payments.

resident alien — Definition (Mortgages, Legal-contracts)

A person who is a legal permanent resident, but not a citizen, of Canada.

restructured loan — Definition (Mortgages, Financial-banking)

A mortgage in which basic terms -- such as interest rate, term and monthly payment -- have been changed to prevent foreclosure. Not a normal practice in Canada.

reverse mortgage — Definition (Investments, Mortgages, Taxation, Financial-banking)

A loan that allows an older homeowner to convert built-up equity into cash. The loan comes due when the owner dies, sells the house or moves out.

revolving credit — Definition (Mortgages, Financial-banking)

A line of credit that does not have a specified repayment schedule but may require a minimum payment to cover interest and contribute to paying off principal. Typical of credit card loans, chequing account cash reserve or overdraft accounts that have pre-approved lines of credit.

roll in — Definition (Mortgages, Real-estate)

To include certain closing costs, such as origination and settlement fees, in the mortgage.

roll in loans — Definition (Mortgages, Financial-banking)

A refinancing loan that rolls any closing costs or fees into the loan. These programs best serve people who have a reasonable amount of home equity, want to reduce their overall interest expense, and plan to stay in their homes.

roll over mortgage — Definition (Mortgages, Financial-banking)

A type of loan where the interest rate is set for a specific term. At the end of this term, the mortgage is said to "roll-over" and the borrower and lender may agree to extend the loan. If satisfactory terms cannot be agreed upon, the lender is entitled to be repaid in full. In this case, the borrower may seek alternative financing.

seasonal unemployment — Definition (Mortgages, Taxation, Financial-banking, Legal-contracts)

The loss of jobs due to changes in the climate and other conditions. Forestry, fishing and construction are affected by climate, while retailing is affected by seasons and holidays. For instance, at Christmas, retail employment is higher than in January.

second home — Definition (Investments, Mortgages, Real-estate)

An additionally purchased property, often a vacation or a rental property.

second home mortgage — Definition (Investments, Mortgages, Real-estate)

A mortgage used purchase property, often a vacation or a rental property.

second mortgage — Definition (Mortgages)

A mortgage which ranks after a first mortgage in priority on a registered land title.

secondary market — Definition (Investments, Mortgages, Financial-banking)

A market where financial instruments such as stocks, bonds, options and futures are bought and sold to investors.

secondary mortgage market — Definition (Investments, Mortgages, Financial-banking)

The trade in home loans that are bundled together and sold as securities to investors. It frees money so more people can get mortgages.

secured debt — Definition (Mortgages, Financial-banking)

A debt that is secured by a lien on debtor's property that may be taken by the creditor in case of non-payment by the debtor. A common example is a mortgage loan.

self employed person (SEP) — Definition (Mortgages, Taxation, Financial-banking)

A person who runs a trade or business, rather than working as an employee for someone else. You are self-employed if you are a sole proprietor or a partner working in a business. You can be an employee and self-employed at the same time if you have an independent business outside your regular employee hours. To qualify for many business tax exclusions and deductions, the enterprise must make a profit in three of five years. In most cases in order to qualify you must take and average of the last 2-3 years tax assessments.

self-build insurance — Definition (Mortgages, Real-estate, Insurance)

Insurance that covers a homeowner for problems involved in a construction project.

seller carryback — Definition (Mortgages)

A form of financing in which the seller of a property accepts a down payment and agrees to accept payments until the property is paid for.

shared-appreciation mortgage (SAM) — Definition (Investments, Mortgages, Financial-banking)

A home loan in which the lender offers a below-market interest rate in exchange for sharing in the profit when the home is sold. Usually done only with private funds/lenders.

social insurance number (SIN) — Canada

Every person who has an income or pays taxes must apply for this number, which is assigned by the Government of Canada. You must, by law, provide this number to financial institutions with which you have an interest-bearing deposit account.

  ➥  A nine-digit number that you need to work in Canada or to have access to government programs and benefits. Banks may also request your SIN for tax purposes or to verify credit checks.

solicitor information — Definition (Mortgages, Legal-contracts)

When you apply for a mortgage you will need a law firm with a lawyer's name and their contact information which would typically include the office location, phone number, fax number and e-mail address.

spread — Definition (Mortgages, Financial-banking)

The difference between the interest rate charged to borrowers and the interest rate paid to depositors.