GLOSSARY    M to O

MARKET VALUE

The price that a purchaser is willing to pay for a property.
Market value is affected by the supply of houses. If there are too many houses for sale, prices will drop. Conversely, if there are more buyers than houses, the prices will increase.

MATURITY DATE

The maturity date (or renewal date) is the last day of the term of the current mortgage contract.  On, or before, this date the mortgage must be repaid in full,  renewed with the present lender,  or   switched to another lender.

MORTGAGE

Money is borrowed from a lender to buy property. The lender registers the debt (the mortgage document ) against the property to ensure the money is repaid. If the mortgage payments are not made, the lender can start foreclosure proceedings.

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MORTGAGE CONTRACT / MORTGAGE DOCUMENT

The mortgage document is a legal contract that outlines the terms and conditions for repaying the money borrowed.

Details such as the amount borrowed, the interest rate, the first and last payment dates, and the date the balance is due (the renewal date ) are included.
Additional items can include: prepayment options, and penalties.

The lawyer will explain the details of the mortgage contract. The documents are then signed by the borrower (and, if applicable, the co-signors and guarantors ) and registered against the property in the appropriate Land Titles office.

MORTGAGE INSURANCE

See either:

• life insurance:- personal insurance to cover the outstanding balance of the mortgage,
• house insurance:- to cover the value of your property,   or
• high ratio mortgage insurance:- borrowing more than 75% of the value of the property.

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MORTGAGE RATE BUYDOWN

Some lending institutions will allow a buydown of the mortgage interest rate. A lump sum of money is paid to the institution up front, in order to lower (or buydown) the mortgage rate for the remainder of the term.

If you see an advertisement for a really low mortgage rate for a particular sub-division or strata property, the developer will be buying down the rate to help generate sales.
This is basically 'smoke & mirrors' - if the developers are paying $5,000 to 'buy down' the rate, they should also be willing to charge you $5,000 less for the property and let you negotiate your own mortgage and interest rate.

MORTGAGEE

The lender of mortgage funds.

MORTGAGOR

The borrower of mortgage funds.

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NEW IMMIGRANTS TO CANADA

It is possible to borrow mortgage funds as a new immigrant to Canada. Most lenders (though not all) will lend up to 65% of the property value (appraised value).

The lenders generally will want some credit information from your previous bank - for example how long you dealt there and that all dealings were satisfactory. This should be on bank paper and preferably signed by the Manager.

Confirmation of your new job, or proof of other assets will help with the approval of your application.

NHA

These initials stand for the National Housing Act. Canada Mortgage and Housing Corporation ( CMHC ) is a federal housing agency - their mandate is controlled by the National Housing Act.

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NON-RESIDENTS OF CANADA / OFFSHORE BORROWERS

Perhaps you are not moving to Canada at this time, or you will be using the property only part time while keeping your principal residence in another country.
It is possible to borrow mortgage funds as a non-immigrant to Canada. Some Canadian lending institutions will lend up to 65% of the property value ( appraised value ).

The lenders generally will want some credit information from your current bank. You will be asked how long you have dealt there and that all dealings are satisfactory. This information should be provided on your bank's letterhead paper and preferably signed by the Manager.

Most lenders will require confirmation of your income for the last two (or three) years. Proof of other assets will help with the approval of your application. Some lenders may insist you keep an amount equal to your total payments for 6 months or 1 year.

Private lenders may lend up to 75% of the value of the property at higher interest rates than traditional lenders. A setup fee will usually be charged also.

OPTION TO PURCHASE / OPTION AGREEMENT

A document formalizing an agreement that, in exchange for a deposit, an individual is to be given the first chance to buy a property at (or within) a specified period of time.

If the option holder does not buy within the specified period, she or he loses the deposit and the agreement is cancelled.

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