Adjustable payment – Your mortgage payment will go up and down with interest rate movements.

Adjustable Rate Mortgage (ARM) - A  mortgage loan in which the interest rate is adjusted periodically in accordance with a specified index, e.g.: the rate of your ARM will shift in line with any changes in Chartered Bank Prime rate. It may also be referred to as a variable rate mortgage.  An ARM allows you to move with the market, giving you the flexibility to take advantage of low interest rates.

Amortization schedule - A table which shows all mortgage payments over the entire term of the mortgage, specifically how much of each payment will be applied toward principal and how much toward interest over the life of the loan.

Appraisal - An independent assessment of the property by a qualified individual.

Assessments - Condo assessments are a dollar amount paid by the condominium owner to cover a proportional share of the common expenses of the property.

Beacon Score - is a measure of credit risk. It is calculated based on data regarding a person’s loan repayment history and can be used to check credit worthiness. Also referred to as a credit score.

Closed mortgage - A mortgage that has a fixed interest rate (usually lower than an open mortgage rate) and a set term that you cannot change. You cannot pay off a closed mortgage before the agreed end date without a penalty.

Closing costs - Fees which need to be paid once you get your loan—e.g., items that must be escrowed, taxes, title insurance, financial costs and other settlement costs.

Closing date - The date, on which the sale becomes final, the new owner takes possession of the property and funds are transferred from the purchaser to the vendor.

Conventional mortgage - A mortgage where the borrower is contributing more than 20% of the value of the property as the down payment, or deposit.

Cost of borrowing - Your cost of borrowing is the interest rate that you’ve agreed to pay for the current term of your mortgage.

Cost of credit - Your cost of credit is the total amount of interest you will pay for the term.

Credit Report - A report prepared by a credit bureau and used by lenders in determining an individual's creditworthiness.

Daily Simple Interest - A method of interest accrual in which interest is calculated on a daily basis.

Default - A homeowner is ‘in default’ when he or she breaks the terms of a mortgage agreement, usually by not making required mortgage payments or by not making payments on time.

Delinquency - Late or non-payments on a mortgage loan.

Down Payment – The amount of money you can immediately pay toward the purchase price of your property. This is usually referred to in a percentage. (i.e. 20% of $300,000 equals a $60,000 down payment.) Sometimes referred to as your “deposit.”

Earnest money - A deposit usually held in escrow and applied to closing costs at time of settlement. Earnest money serves as an indicator that the buyer is serious about the purchase.

Easement - A right to access property owned by another.

Eminent Domain - The right of the government to take private property for public use.

Escrow Agent - A third party that receives, holds and/or disburses certain funds or documents upon the satisfaction of certain conditions. The “escrow” impounds or reserves monies for the payment of taxes, insurance, or other bills.

Escrow Analysis - A periodic analysis by a lender each year of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance, and other bills when due.

Equity - The difference between the market value of a property and the amount owed on the property. This difference is the amount a homeowner actually owns outright.

FICO Score - The Fair Isaac Credit Organization (FICO) score is a measure of credit risk. It is calculated based on data regarding a person’s loan repayment history and can be used to check credit worthiness. Also referred to as a Beacon score.

First Mortgage - The primary lien against a property, taking priority over all other liens.

Fixed Payment - Even if interest rates change, the amount of your regular payment will remain the same for the term of your loan. As interest rates drop, more of your payment is applied to your mortgage principal. If rates rise, more is applied to interest.

Fixed-Rate Mortgage - A mortgage where the interest rate remains the same for the life of the loan.

Foreclosure - A legal procedure in which real estate is sold by the lender to pay the outstanding debt in case of default.

Freehold – Means that one person (or two, such as joint ownership by spouses) owns the land and house outright. There is no space co-owned or co-managed with owners of other units. Detached and semi-detached homes, duplexes and townhouses are usually owned freehold.

Good Faith Estimate - An estimate of the fees due at closing and provided by the mortgage lender within three business days of applying for a loan.

GDS Ratio (Gross Debt Service Ratio) - The percentage of gross annual income required to cover payments associated with housing. Payments include mortgage principal, interest, property taxes, and sometimes include secondary financing, heating, condominium fees or paid rent.

Homeowner’s Insurance - Property insurance that covers private homes in the event of property loss or damage. Sometimes referred to as Hazard Insurance.

High Ratio Mortgage - A mortgage where the borrower is contributing less than 20% of the value of the property as the down payment.

Index - A published interest rate, such as prime rate or LIBOR. Lenders use indices to determine interest rates on mortgages or to compare investment returns.

Land Transfer Tax - A tax that is levied (in some provinces) on any property that changes hands.

Lawyer/Notary – Your lawyer—in Quebec, a notary—will protect your interests when you are buying a home. This includes searching the title to see if there are any liens or outstanding work orders, and checking the offer to purchase. The lawyer or notary is also responsible for closing arrangements, such as ensuring that all monies are paid appropriately.

Lien - A legal claim by one party against the property of another as security for a debt.

Mortgagee/Mortgagor - Mortgagee is the lender; mortgagor is the borrower.

Mortgage Insurance (MI) - Insurance that covers mortgage lenders against losses incurred should a borrower default on a home loan. This is usually required on all loans with a loan-to-value (LTV) higher than 80 percent.

Mortgage Rate - The percentage interest that you pay on top of the loan principal. For example, you may take out a mortgage of $100,000 at a rate of 12%. Your monthly payments will consist of a portion of the original $100,000, plus 12% interest.

Multiple Listing Service (MLS) - A computerized listing of the properties available in your area, including information and pictures of each property.

Offer to purchase/Conditional offer - A written contract outlining the terms under which the buyer agrees to purchase the property. There may be conditions attached to the offer, for example: offer being subject to arranging the mortgage or selling a home.

Open Mortgage - A mortgage that you can pay off, renew or refinance at any time. The interest rate for an open mortgage is usually higher than a closed mortgage rate.

Origination Fees - A fee paid to the bank or loan broker for their services in originating the loan.

A Portable or Assumable Mortgage - The type of financing arrangement in which the outstanding mortgage and its terms can be transferred from the current owner to a buyer.

Prepayment Penalty - A fee borrowers will pay to lenders if the borrowers repay part or all of their loan in advance of the regular schedule.

Pre-paid property tax and utility adjustments - The amount you will owe if the person selling you the home has pre-paid any property taxes or utility bills. The amount to reimburse them will be calculated based on the closing date.

Pre-payment - Repaying part of your mortgage ahead of schedule. Depending on your mortgage agreement, there may be a penalty for pre-paying.

Property Tax - The tax that an owner of real estate pays and is assessed in proportion to the appraised monetary value of the property. Similar to council rates in Australia, these payments cover local services like schools, garbage collection, etc.

Quitclaim Deed - A deed that transfers all interest, title, or claim an owner has in a property, without warranty.

Refinancing - Increasing the amount of your current mortgage, at a new interest rate. The term of the new mortgage must be equal to or greater than the term remaining on your current mortgage.

Renewal/Renewing - Once the original term of your mortgage expires; you have the option of renewing it with the original lender or paying off all of the outstanding balance.

RRSP (Registered Retirement Savings Plan) – If you have an RRSP, you can take up to $20,000 from it for a down payment on a house. If you pay the amount you took out back by a certain time, you don’t pay income tax on your withdrawal.

Second Mortgage - A mortgage that has a lien position subordinate to the first mortgage.

TDS Ratio (Total Debt Service Ratio) - The percentage of gross annual income required to cover payments associated with housing and all other debts and obligations, such as personal loans, car loans, credit cards, telephone, internet & cable TV, water bill, student loan, etc

Term – The term of a mortgage is the duration of your commitment to your existing lender, rate, payments, etc. It should be distinguished from the amortization period that is the period used for determining your ongoing payments and the final point in time when you mortgages should be paid in full.

Title Search - A check of title records to ensure the legal ownership of a property by the seller, and to ensure no liens or other claims are outstanding.

Underwriting - The examination and analysis of the risk involved in making a mortgage loan to determine the risk to the lender. The process includes the evaluation of the property as outlined in the appraisal report, and of the borrower's ability and willingness to repay the loan.

Variable Rate Mortgage - A mortgage with an interest rate that changes with the market. The rate changes each month, so the portion of your monthly payment that goes towards interest may go up or down each month. But your total monthly payment will probably stay the same.