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The Home Buyer's Glossary of Terms

AMORTIZATION: The actual number of years it will take to pay back your mortgage 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.

ASSUMABILITY: allows the buyer to take over the seller's mortgage on the property.

CLOSED MORTGAGE: A mortgage that locks you into a specific payment schedule. A penalty usually applies if you repay the loan in full before the end of the closed term.

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

CONDOMINIUM FEE: A common payment among owners which is allocated to pay expenses.

CONVENTIONAL MORTGAGE: A mortgage loan issued for up to 75% of the property's appraised value or purchase price, whichever is less.

DOWN PAYMENT: The buyer's cash payment towards the property. The difference between the purchase price and the amount of the mortgage loan.

EQUITY: The difference between the home's selling value and the debts against it.

HIGH-RATIO MORTGAGE: A mortgage that exceeds 75% of the home's appraised value. These mortgages must be insured for payment.

INTEREST RATE: The value charged by the lender for the use of the lender's money. Expressed as a percentage.

LAND TRANSFER TAX, DEED TAX OR PROPERTY PURCHASE TAX: A fee paid to the municipal and /or provincial government for the transfer of property from seller to buyer.

MATURITY DATE: The end of the term, at which time you can pay off the mortgage 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: Pays off the mortgage if the borrower dies.

OPEN MORTGAGE: Allows partial or full payment of the principal at any tome, without penalty.

PORTABILITY: A mortgage option that enables borrowers to take their current mortgage with them to another property, without penalty.

PRE-APPROVED MORTGAGE: Qualifies you for a mortgage before you start shopping. You know exactly how much you can spend and are free to make a "firm: offer when you find the right home.

PREPAYMENT PRIVILEGES: Voluntary payments in addition to regular mortgage payments.

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 re-negotiating 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.

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

TERM: The length of time the interest rate is fixed. It also indicates when the principal balance becomes due and payable to the lender.

TITLE: Legal ownership in a property.

VARIABLE-RATE MORTGAGE: A mortgage with fixed payments, but fluctuates with interest rates. The changing interest rate determines how much of the payment goes towards the principal.

VENDOR TAKE-BACK MORTGAGE: When the seller provides some or all of the mortgage financing in order to sell their property.