Most people need to derive at least half of their retirement income from personal or workplace savings. The other half is covered by the Canada Pension Plan and Old Age Security payments.
Glossary
A
Abstract of Title
Registry System: A condensed history of the title to a parcel of land. The abstract consists of a synopsis of every recorded instrument affecting the title to that land arranged in chronological order of recording.
Accelerated Bi-Weekly Mortgage Payments
Mortgage payments, which are made every 2 weeks for a total of 26 payments per year. Not to be confused with semi-monthly mortgage payments. Article
Additional Payment
Your proposed extra payment per period, e.g. weekly, bi-weekly, semi-monthly, etc. This payment will be used to reduce your principal balance.
After-Tax Investment Return
Annual percentage return you would retain, after income tax was paid, if you invested your closing costs and down payment instead of purchasing a home.
Amortization Period
The actual number of years it will take to pay back your mortgage loan. In Canada the amortization does not generally exceed 25 years.
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.
Arms Length
A transaction between unrelated entities where a willing seller (the seller is not compelled to sell) transacts with a willing buyer (the buyer is not compelled to buy).
Assumability
Allows the buyer to take over the seller's mortgage on the property.
B
C
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 a closed term.
Closing Costs
Total fees and other costs associated with the new mortgage and paid at the time of closing. This calculator assumes that all closing costs are paid with proceeds other than the new mortgage (closing costs are not added to the total for your new mortgage amount).
Collateral
A security or guarantee (usually an asset) pledged for the repayment of a loan if one cannot procure enough funds to repay.
Compound Period
The number of times per year in which the interest rate is compounded. In Canada, mortgages are generally compounded semi-annual, which is twice per year.
Condominium Fee
A common payment among owners, which is allocated to pay expenses, associated with the development.
Conventional Mortgage
Mortgage loans issued for up to 75% of the property's appraised value or purchase price, whichever is less.
D
Down Payment
The buyer's cash payment toward the property. The difference between the purchase price and the amount of the mortgage loan.
E
Equity
The difference between the price for which a property could be sold less the total debt registered against the property.
Effective Interest Rate
This is the actual interest rate paid on a loan or mortgage. In Canada, mortgages typically have a higher effective interest rate because of the fact that interest rates are compounded semi-annually or twice per year.
F
First Mortgage
The first mortgage in the mortgage agreement that is considered to be in first place and will have first claim on assets in the event of default.
Fixed Rate Mortgage
A mortgage in which the rate of interest has been fixed for a specific period of time. This specific period of time is generally known as the term.
G
GST
This calculator calculates GST at 7% of a new home's purchase price minus a GST rebate. GST rebates are calculated as follows. For homes under $350,000, the rebate amounts to 36% of GST, up to a maximum rebate of $8,750. For homes between $350,000 and $450,000, the maximum rebate of $8750 declines to zero on a proportional basis. All homes selling for more than $450,000 receive no GST rebate.
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 pad rent.
H
High-Ratio Mortgage
A mortgage that exceeds 75% of the home's appraised value or purchase price, whichever is lower. These mortgages must be insured for payment.
Home Equity Loan
Home Equity is the portion of your home that is yours - free and clear! Calculation: Take the value of your home minus the amount you owe on your mortgage.
I
Interest Rate
The value charged by the lender for the use of the lender's money. Expressed as a percentage.
J
K
L
Land Transfer Tax, Deed Tax Or Property Purchase Tax
A fee paid to the municipal and/or provincial government for the transferring of property from seller to buyer.
Lend-able Equity
To determine the amount of money we can lend you, we calculate your "lend-able equity" which is the secure money that you already have. This is primarily based on the equity in your home, but also takes into account factors such as:
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Perceived risk
How long you've lived in your home
The amount of your mortgage down payment
Loan To Value Ratio
The ratio of the loan to the appraised value or purchase price of the property, whichever is lower.
M
Maintenance/Condo Fee
Monthly fee charged for your condominium and any other maintenance costs you expect to incur with the ownership of this home. Please note that condominiums are referred to as "strata" in the Province of British Columbia.
Maturity Date
The end of the term, at which time you can pay off the mortgage or renew it.
Monthly Rent Payment
Amount you currently pay for rent per month.
Mortgage Amortization (Years)
Total length of your original mortgage in years. Most common lengths are 20 years and 25 years
Mortgagee
The party who advances the funds for a mortgage loan. The lender.
Mortgage Fees
Fees your financial institution charges for originating your mortgage.
Mortgage Insurance
Applies to high-ratio mortgages. It protects the lender against loss if the borrower is unable to repay the mortgage.
Mortgage Loan Insurance Premium (non-refundable)
Mortgage insurance makes it possible for homebuyers to purchase a home using a lower down payment. The Canadian Bank Act prohibits most federally regulated lending institutions from providing mortgages without mortgage loan insurance for amounts that exceed 75% of the value of the home or purchases with less than 25% down payment. The Canadian Mortgage and Housing Corporation (CMHC) and Genworth Financial both offer Mortgage Loan insurance.
Mortgage Life Insurance
Pays off the mortgage if the borrower dies.
Mortgagor
One who gives a mortgage as security for a loan. The borrower.
N
Nominal Interest Rate
An interest rate, which does not necessarily correspond to the effective interest rate. In Canada, these two rates do not correspond.
Number Of Years Remaining
This is the total number of years you have left to pay on your mortgage. The earlier you start your payoff plan, the more interest you can save. Just starting a few years earlier can really add up.
O
Open Mortgage
Allows partial or full payment of the principal at any time, without penalty.
Original Mortgage Amount
The original amount financed with your mortgage, not to be confused with the remaining balance or principal balance.
OSB (Outstanding Balance)
The amount of principal that is still outstanding at the end of the term.
P
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 Penalties
Some mortgages require you to pay a penalty if the mortgage is paid off early. If you current mortgage has a penalty for prepayment, enter that amount here. Your prepayment penalties are assumed to be an additional cost that is paid at the time of closing.
Prepayment Privileges
Voluntary payments in addition to regular mortgage payments.
Prepayment Type
This is the type of prepayment you are going to make. You can choose from one time, monthly, weekly, bi-weekly, semi-monthly or yearly.
Principal
The amount borrowed or still owing on a mortgage loan. Interest is paid on the principal amount.
Q
R
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.
S
Semi Monthly Mortgage Payments
Mortgage payments which are made on the 1st and 15th of the month, or twice per month, 24 payments per year. Not to be confused with bi-weekly mortgage payments (26 payments per year). Article
Second Mortgage
Additional financing. Usually has a shorter term and higher interest rate than the first mortgage.
T
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 car loans and credit cards.
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.
U
V
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.
W
X
Y
Z
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