MORTGAGE
A written document, in the form of a temporary conditional contract, taken by a lender as security for the repayment of a loan.
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PRE-APPROVAL
A commitment by a lender to make a mortgage loan to a specified borrower, prior to the identification of a specific property.
ACCRUED INTEREST
Interest that is earned but not paid by the individual on their loan amount. This interest in addition to the outstanding amount.
AGREEMENT OF SALE & PURCHASE
A contract signed by buyer and seller stating the terms and conditions under which a property will be sold.
AMORTIZATION
The scheduled payment less the interest amount equals amortization. The loan balance declines by the amount of the scheduled payment, plus the amount of any extra payment.
AMORTIZATION SCHEDULE
A table showing the mortgage payment, broken down by interest and amortization, loan balance, and insurance payments if made by the lender.
APPLICATION
A request for a loan that includes the information about the potential borrower, the property and the requested loan amount.
APPLICATION FEE
A fee charged by some lenders to accept an application.
VALUATION
A written estimate of a property’s current market value prepared by an appraiser.
VALUATION FEE
A fee charged by an appraiser for the appraisal of a particular property.
APPROVAL
Acceptance of the borrower’s loan application.
CUMULATIVE INTEREST
The sum of all interest payments to date or over the life of the loan.
DOCUMENTATION REQUIREMENTS
The set of lender requirements that specify how information about a loan applicant’s income and assets need to be provided.
DOWN PAYMENT
An initial amount paid as a percentage of the total value of the property to secure the purchase.
INTEREST DUE
The amount of interest to be paid is determined by multiplying the loan balance by the annual interest rate, and dividing it into the interest accrual period.
INTEREST RATE
The rate charged the borrower for the loan of money. The rate is determined by the lender and can fluctuate in accordance with the financial market.
INVESTOR
A borrower who owns or purchases a property as an investment rather than as a residence.
LOAN AMOUNT
The amount the borrower promises to repay, as set forth in the mortgage contract.
LOAN-TO-VALUE (LTV) RATIO
The loan amount divided by the lesser of the selling price or the appraised value. Also referred to as LTV. The LTV and down payment are different ways of expressing the same set of facts.
MAXIMUM LOAN AMOUNT
The largest loan size permitted. This is worked out for the individual by the lender, subject to the lending criteria.
