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Glossary of Mortgage Terms

Blanket Mortgage
A single document which is registered covering more than one title to property.

Bridge Loan
A short term loan granted to a borrower usually to bridge the gap between the closing date of the property being purchased and the closing date of the property being sold (usually closing after the other transaction).

Collateral Mortgage
Where the lender required additional security he may take his collateral security in the form of an additional mortgage either on realty or on personal property. It may include property that is necessary or convenient to the continued use of the primary security or property unrelated to the primary security. Alternatively, a mortgage may secure his loans by means of cross-collateralization or cross default, ie. a default on one loan constitutes a default on the other. Both loans can be secured by a blanket mortgage, but the borrower’s equity in both properties is at risk.

A loan where the property mortgaged is collateral security to another document (ie promissory note, PLC Agreement, et.). The primary document forms the basis of the “contract” and the property is collateral security for the loan.

Commitment Fee
This fee is charged by a lender for keeping an agreed amount of funds available to the borrower for a specified period of time.

Condominium
The ownership of a separate amount of space in a multiple dwelling or other multiple-occupancy building with proportioned tenancy in common ownership of common elements used jointly with other owners.

Construction Advance
Money advanced to the borrower under a construction loan.

Debt service
The amount of principal and interest repayments made under a mortgage on a periodic basis.

Effective interest rate
The annual effective interest rate paid by the borrower taking into account compound interest plus any costs incurred in arranging the mortgage.

First Mortgage
A mortgage on a property creating a prior claim over any subsequent mortgages or charges and usually conveying the legal estate to the mortgagee. Upon power of sale of the mortgage, the first mortgage must be fully satisfied before any subsequent claims can be paid from the proceeds.

Holdback
An amount of money retained by a construction lender or owner until satisfactory completion of the work.

Interest
"Annual" profit on a loan of money. The price paid to rent money. A function of the rate of interest over a period of time on a specific sum of money.

Lending value
An independent appraiser’s value interpreted by the lender as to the worth of a property in the current market given a reasonable time period to sell the property.

Letter of commitment
Letter written by the lender containing the amount of the loan, specified interest rate, term of loan, length of time commitment is valid for, and specific conditions.

Mortgage
A conveyance of property to a creditor, as security for payment of a debt. Such security is redeemable or recoverable on the payment or discharge of the debt at a specified date. An encumbrance registered on the title of the lands.

Mortgage debt service
The amount of funds required, on a periodic basis, to meet all mortgage obligations.

Mortgage
The one to whom property is conveyed (lender). The holder of the mortgage.

Mortgagor
The one who makes the payments. The owner of the property (the borrower).




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