Mortgage terms explained.
Last day of the term of the mortgage agreement. The mortgage agreement must be either renewed or the balance paid in full on or prior to the maturity date.
Mortgage payment amount
Amount that the borrower is required to pay to the lender on a regular basis during the mortgage term.
The lender of a mortgage.
The borrower of a mortgage.
A mortgage which can be prepaid at any time, without penalty. The opposite of an "open mortgage" is a "closed mortgage."
The choice of making regular mortgage payments every week, every other week, twice a month or monthly.
The process through which a borrower transfers or "ports" the remainder of their existing mortgage from one property to a new property. In most cases both the borrower and the property must meet the new lender's approval criteria.
If a borrower makes a prepayment of the mortgage in an amount greater than the Prepayment Privilege, that borrower may incur a Prepayment Charge, which is an amount that a borrower must pay in addition to any prepayment amount.
The amount of money that a borrower is allowed to pay against the principal balance of the mortgage each year without incurring additional charges.
Refinance or Renegotiate
Change the conditions of your mortgage before its maturity date. Often a mortgage is refinanced to obtain a lower interest rate or to take additional funds.
Extend the mortgage agreement with the same lender when it matures. If you decide not to renew your mortgage, it must be paid out at maturity.
Period of time over which the interest rate, payment and other conditions are set. At the end of the term, the mortgage has to be paid in full or renewed. Not to be confused with amortization period. For example, a mortgage could have a term of 5 years and an amortization period of 25 years.
Total Debt-Service Ratio
The percentage of a borrower's gross income (before tax) needed to cover payments for housing costs, including principal, interest, taxes, heating costs and condominium fees (if applicable), and all other debts and obligations, such as loans and credit cards.