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Amortization: The number of years it takes to repay the entire amount of the mortgage.

Appraisal Value: An estimate or a property’s market value by a professional Appraiser; used by lenders in determining the amount of the mortgage.

Equity: The difference between the price for which a property by the seller that can be sold and mortgage(s) on the property. Equity is the owner’s stake in the property.

Assumable Mortgage: A mortgage held on a property by the seller that can be taken over by the buyer, who then accepts responsibility for making the mortgage payments.

Conventional Mortgage: A mortgage load that is 75% or less of the load-to-value ratio, and does not require insurance by CMHC or other private insurer.

First Mortgage: The first security registered on a property. Additional mortgages secured against the property are “secondary” to the first mortgage.

High-Ratio Mortgage: A mortgage that exceeds 75% of the loan-to-value ratio; must be insured by either the Canada Mortgage and Housing Corporation (CMHC) or a private insurer to protect the lender against default by the borrower who has less equity invested in the property.

Open Mortgage: A mortgage that can be prepaid or renegotiated at any time and in any amount, without penalty.

Pre-Approved Mortgage: To be tentatively approved by a financial institution for a specified amount, interest rate and monthly payment.

Second Mortgage: A second financing arrangement, in addition to the first mortgage, also secured by the property. Second mortgages are usually issued at a higher interest rate and for a shorter term than the first mortgage.

Term Mortgage: A non-amortizing mortgage under which the principle is paid in its entirety upon maturity date; sometimes called a straight load.

Variable-Rate Mortgage: A mortgage for which payments are fixed, but whose interest rate changes in relationship to fluctuating market interest rates. If rates go down, a larger portion of the payment is applied to the principle.

Refinancing: Obtaining a new mortgage, usually at a lower interest rate, to replace the existing mortgage.

Term: The actual life of a mortgage contract – from six months to ten years – at the end of which becomes due and payable unless the lender renews the mortgage for another term.