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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
A certificate obtained from the municipality before 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 house value.

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.