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A consumer guide and workbook - page 51 / 79





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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.

Mortgage Payment

Principal, interest and taxes — payments due on a regular basis under the terms of the mortgage agreement.

Generally, payments are made monthly and include one-twelfth of the estimated annual municipal and school taxes. Since these taxes change from year to year, this section of the mortgage will change accordingly.

A regularly scheduled payment that is blended to include both principal and interest.


Principal, interest, taxes and heating—costs used to calculate


The lender who provides the mortgage loan.


the Gross Debt Service ratio (GDS).


The amount of money actually borrowed.

The borrower who pledges the property as security for the loan.

Net Worth

Your total financial worth, calculated by subtracting your total liabilities from your total assets.


A real estate representative who is a member of an organization of persons engaged in the business of buying and selling real estate, such as the Canadian Real Estate Association. Easement

Offer To Purchase

A written contract setting out the terms under which the buyer agrees to buy. If accepted by the seller, it forms a legally binding contract subject to the terms and conditions stated in the document.

Option Agreement

A document stipulating that, in exchange for a deposit, a specified individual is to be given the first chance of buying a property at or within a specified period of time.

An option holder who does not buy at or within the specified period loses the deposit and the agreement is cancelled.


To pay off a mortgage or other registered encumbrance and arrange for a new mortgage, sometimes with a different lender.

Second Mortgage

An additional mortgage on a property that already has a mortgage.

Statement of Adjustment

A balance sheet statement that indicates credits to the vendor, such as the purchase price and any prepaid taxes, and credits to the buyer, such as the deposit and the balance due on closing.


A document that illustrates the property boundaries and measurements, specifies the location of buildings on the property, and indicates any easements or encroachments.




The length of time during which a mortgagor pays a specific interest rate on the mortgage loan.

The entire mortgage principal is usually not paid off at the end of the term because the amortization period is normally longer than the term.


A freehold title gives the holder full and exclusive ownership of land and buildings for an indefinite period of time.

In condominium ownership, land and common elements of buildings are owned collectively by all unit owners, while the residential units belong exclusively to the individual owners.

A leasehold title gives the holder a right to use and occupy land and buildings for a defined period of time.

Total Debt Service Ratio (TDS)

The percentage of gross monthly income required to cover all monthly payments for housing and all other debts, such as car payments.

Vendor Take Back Mortgage

Mortgage financing arranged between the seller of the property and the buyer. The title is trans- ferred to the buyer.

Often this type of loan is a second mortgage which the seller is willing to arrange at below market rates to ensure the buyer can purchase the house. Most of these arrangements are not renewable or transferable to the next owner of the house.

Zoning Bylaws

Municipal or regional laws that specify or restrict land use.

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