Acceleration
This is an expression that is usually used when a person chooses to pay a mortgage on a weekly or a bi-weekly basis although it can apply to any repayment program. All mortgages are drawn with a requirement that you make payments monthly, however, the bank will usually agree to administer one half of the required monthly payment each bi-weekly period, you are paying the equivalent to one extra monthly payment per year and therefore paying off your mortgage more quickly. If you chose to pay weekly and pay one quarter of a monthly payment each weekly period you get the same benefit. Be sure to arrange that your mortgage payment dates match your pay days!

Amortization
The period of time it takes to pay off your mortgage in full. Typically you would choose the longest amortization available which is 25 years.

Appraisal
A process which determines the market value of property. This will usually be performed by a professional appraiser who will prepare a comprehensive report complete with photographs of the home.

Assumable
When a mortgage is assumable, a buyer may take over the responsibilities and benefits of the sellers' existing mortgage. This may be advantageous to a buyer if the interest rate on the mortgage is below the current market rates. Before assuming a mortgage, approval must be obtained from the lender.

Blended Payment
A mortgage payment that includes both interest and principal repayment. The amount of interest taken from each payment reduces while the amount applied to principal reduction increases over time, but the payment remains constant.

Closed Mortgage
A mortgage may be an open or closed mortgage. An open mortgage usually charges a higher interest rate but may be paid off at any time without penalty while a closed mortgage may not be paid off during the term without penalty. Be careful as some mortgages may not be paid off even with a penalty before the maturity date. See also Prepayment Penalty and Maturity Date.

Closing Costs
Expenses, in addition to the purchase price of the home, that  are payable on completion date.

Commitment Letter
Written notification from the lender to the borrower that approves the mortgage request and which should include the amount of the mortgage, interest rate, payment and all terms and conditions.

Completion Date
The date on which your purchase will complete and money will change hands between you and the sellers.

Conventional Mortgage
A mortgage loan up to a maximum of 75% of the purchase price is referred to as a conventional mortgage. Any mortgage in excess of 75% must be insured against default. See High Ratio Mortgage.

Gross Debt Service Ratio (GDS)
The percentage of your gross income which you will be using to pay for the mortgage payment including property taxes. See also Total Debt Service Ratio. (TDS).

High Ratio Mortgage
A mortgage where you have a down payment of less that 25% of the purchase price. This type of mortgage must be insured against default. See also Conventional Mortgages.

Interest Adjustment Date
The date that the lender will start collecting interest. Your regular payments will commence one payment period after this date. For example, if you have chosen to make bi-weekly payments, your first payment will come due two weeks after the Interest Adjustment Date. When you sign your mortgage papers the bank will collect from you an "Interest Adjustment" which is a calculation of interest from the Completion Date to the Adjustment Date.

Loan to Value Ratio
The amount of the mortgage expressed as a percentage of the value of the home. For example, if you wish to borrow $190,000 on a home you are buying for $200,000, the Loan to Value Ratio is 95%.

Maturity Date
The last day of the term of your mortgage agreement. On the Maturity Date the mortgage must be paid in full, renewed with the same lender or transferred to a new lender.

Mortgage
A mortgage is actually a document which is registered in Land Titles Office and provides evidence that you have given your home as collateral to a lender to secure a loan. In practice, the loan itself is usually referred to as a mortgage.

Mortgagee
The lender who provides a loan secured by a mortgage.

Mortgagor
A person who takes out a loan which is secured by a mortgage.

Net Worth
The difference between what you own (assets) and what you owe (liabilities) is called your net worth.

Portable
A portable mortgage is a mortgage that can be transferred from one property to another. This is particularly useful if you sell one home and buy another.

Prepayment Penalty
Unless it is open, the mortgage may not be paid off before the Maturity Date without paying a Prepayment Penalty. Be very careful when negotiating a mortgage as some mortgages cannot be paid off at all before the Maturity Date. See also Closed Mortgages and Maturity Date.

Prepayment Privilege
When you negotiate a closed mortgage, you are entering into an agreement with the lender that you will not pay off the mortgage during the term. In return, the lender agrees to maintain the same interest rate throughout the term. However, most mortgages allow certain prepayment privileges such as an annual prepayment of a certain percentage of the mortgage amount or an annual increase in the mortgage amount. An open mortgage will usually cost more but allows you to repay the mortgage in full or in part at any time without penalty.

Principal
The amount of money actually borrowed.

Survey
A certificate showing the home and other buildings relative to the property boundary.

Term
The length of time that the lender guarantees the interest rate. At the end of the term, the mortgage comes up for re-negotiation. See also Maturity Date.

Total Debt Service Ratio
The percentage of your gross income which you will be using to pay for the mortgage payment including property taxes and all other debt payment such as credit cards and bank loans. See also Gross Debt Service Ratio (GDS).