房屋贷款术语

Prepayment
This is a previlige that will allow you to pay down your mortgage with a lump sum, or an extra payment, without penalty.

Portability
This means you can transfer the terms and conditions of your mortgage to your next home. For example, this may allow you to keep a low interest rate if you sell one house and buy another.

Assumability
This means you may be able to assume (take over) the existing mortgage on the property. It may have attractive features, such as a lower interest rate than the prevailing market. In turn, an assumable mortgage may be a selling feature for you when you decide to move on in the housing market.

Expandability
This lets you expand the principal on a first mortgage at the lenders agreed-upon rate of interest. This can be a cost-effective way to finance a home renovation.

Term
The term of a mortgage is the length of time that certain factors, such as the interest rate you pay, are set at a negotiated level. Terms usually last anywhere from six months to 10 years. At the end of the term you either pay off your mortgage or renew it, possibly renegotiating its terms and conditions.

Generally, the longer the term the higher the interest rate. Many experts suggest you select a long term if interest rates are rising. If rates are falling, you may want to select a short term and then lock in the rate when you think rates won’t go any lower. Note that the term is not the amortization period.

Amortization
This is the amount of time over which the entire debt will be repaid. Most mortgages are amortized over 15-, 20- or 25-year periods. The longer the amortization, the lower your scheduled mortgage payments, but the more interest you pay in the long run.

Assumption Agreement
A legal document signed by a home buyer that requires the buyer to assume responsibility for the obligations of a mortgage by the builder or the original owner.

Blended Payment
A mortgage payment that includes principal and interest. It is paid regularly during the term of the mortgage. The payment total remains the same, although the principal portion increases over time and the interest portion decreases.

Closing Costs
Costs, in addition to the purchase price of the home, such as legal fees, transfer fees and disbursements, that are payable on the closing date. Closing costs typically range from 1.5%-4% of a home's selling price.

Covenant
A clause in a legal document which, in the case of a mortgage, gives the parties to the mortgage a right or an obligation. For example, a covenant can impose the obligation on a borrower to make mortgage payments in certain amounts on certain dates. A mortgage document consists of covenants agreed to by the borrower and the lender.

Gross Debt Service Ratio (GDS)
The percentage of the borrower's gross monthly income that will be used for monthly payments of principal, interest, taxes, heating costs and half of any condominium maintenance fees.

Holdback
An amount of money withheld by the lender during the progress of construction of a house to ensure that construction is satisfactory at every stage. A standard holdback amount is 10% of the total cost of the building project.

Interest Adjustment Date (IAD)
A date from which interest on the mortgage advanced is calculated for your regular payments. This date is usually one payment period before regular mortgage payments begin. Interest due from the date your mortgage is advanced to the IAD is due on closing.

Lien (Mechanic's)
A claim against a property for money owing. A lien may be filed by a supplier or a subcontractor who has provided labour or materials but has not been paid. A lien must be properly filed by a claimant. It has a limited life, prescribed by statute that varies from province to province. If the lienholder takes action within the prescribed time, the homeowner may be obliged to pay the amount claimed by the lien- holder. Alternatively, the lienholder may force a sale of the property to pay off the debt.

Mortgage Loan Insurance
If you have a high-ratio mortgage (more than 75% of the purchase price), your lender will require mortgage loan insurance- available from CMHC or a private insurer. The insurance premium will cost between 0.5% and 3.75% of the amount of the mortgage (additional charges may apply).

Mortgage Life Insurance
This insurance guarantees that if you die your mortgage will be paid in full. This insurance can be conveniently purchased through your lender and the premium added to your mortgage payments. However, you may want to compare rates for equivalent products from an insurance broker.