Jargon Buster
Accelerated Payment Frequency
A schedule of weekly or bi-weekly payments that allows you to pay more towards your principal, reducing the amount of interest you pay and the life of your mortgage. The accelerated weekly payment is determined by dividing the monthly payment by four, and the accelerated bi-weekly payment is determined by dividing the monthly payment by two.
For example, if the regular monthly payment for your mortgage is $1,000, you will pay $12,000 a year in mortgage payments. But if you choose an accelerated weekly payment schedule, you will pay $250 per week (one quarter of the monthly payment of $1000), for a total of $13,000
Amortization Period
The amount of time it would take to repay a loan in full based on the payment amount at the selected payment frequency and current interest rate. At
Anti Money Laundering Legislation
Federal Anti-Money Laundering Legislation requires us to ask you what your intended use of this account is.
Annual Family Income Before Tax
Your Annual Family Income Before Tax is the total salary, and commissions, before deductions by all household members who are applicants for the mortgage.
If you are a regular salary earner, you should base your income on your gross annual income before taxes not including bonuses.
If you are a commission based earner or self-employed, you should base your income on an average of your last three years Notice of Assessments from Canada Revenue.
Annual Property Taxes
Property taxes vary for each property and are dependant on the city's property tax rate and the assessed property value. You can usually find the property taxes for a particular property on the MLS listing or you can ask your real-estate agent, builder, or local municipality.
Appraised Value
The market value of your home, as determined by a certified appraiser.
Annual Percentage Rate (APR)
The APR expresses the cost of borrowing that you pay to get a loan, including interest and other applicable costs required by the lender (such as appraisal fees) as an annual rate on the principal amount. At ING DIRECT, we take into consideration your selected payment frequency when calculating your APR.
Assets
Goods of value that you own. This can include investments, cash, property, vehicles and other assets. However, most lenders do not include certain assets, such as furniture, jewelry, or antique pieces, when determining the net worth of a loan applicant.
Assignable Mortgage (Transferable)
A mortgage that may be transferred to ING DIRECT from another financial institution.
To be considered assignable, the mortgage cannot be collateral or privately held and must have the same individuals on the
Assumable Mortgage
A mortgage that can be taken over by another person who buys your home.
Blended Rate
An interest rate determined by averaging out two different interest rates, usually your current rate used to calculate your payment and today's rate, taking into account the remaining term of your current mortgage.
Breaking A Mortgage
Your mortgage payments are set according to the interest rate charged for the term or period of time you will be making those payments. Should you wish to get out of these payments, you would be "breaking" the terms of your mortgage agreement, and could incur interest penalties in doing so.
Closed Mortgage
A mortgage that cannot be repaid before maturity.
Closing Date
The day a transaction is completed and usually when money changes hands. When buying a property, the closing date is the day when the seller transfers ownership to the buyer. When getting a loan, the closing date is the day money is transferred from the lender to the borrower.
Co-Borrower
A person whose name does not appear first on the Mortgage or Credit Account documents but has the same rights and obligations as the Primary Borrower. There can be multiple Co-Borrowers (guarantors are not Co-Borrowers).
Condo Fees
Condo fees vary depending on your property size and your condo maintenance requirements. To get an estimate, consult the property manager for the condo you are looking to buy, your real-estate agent, or builder. The ongoing maintenance fees charged by the condominium board can affect the amount of mortgage you can qualify for.
Conventional Mortgage
A mortgage loan for an amount up to 80% of the value of the property.
Convertible Mortgage
At ING DIRECT, our variable rate mortgages may be converted at any time and without charge into a fixed rate mortgage with a term of three years or more.
Cost of Borrowing
The costs charged to the borrower by the lender to obtain a loan, including not just interest but also certain other charges such as appraisal fees. When you obtain a mortgage, you will be informed of your cost of borrowing both as an amount and as an Annual Percentage Rate on the principal amount.
Deed
A legal document that confirms ownership of the property. In Quebec, a deed of hypothec sets out the terms of the mortgage.
Default
The failure to do something that you promised to do, such as make a payment as agreed in a mortgage.
Discharge
Should you sell your current home financed with a mortgage, break your current mortgage contract, make a prepayment equal to the remaining balance of your mortgage or pay off your mortgage in full through regular payments, you will be required to obtain a discharge of the mortgage registration from your mortgage provider. A discharge certifies that the mortgage on your home has been paid off in full, and that your home is free and clear of any obligations owing.
Down Payment
An amount of money you put towards the purchase of your home, which influences the mortgage amount you require. A down payment of 20% or more will determine whether your mortgage needs mortgage default insurance. If your down payment is less than 20% of your purchase price, your mortgage is high-ratio and needs mortgage default insurance. If your down payment is 20% or more of the purchase price, your mortgage is conventional and generally does not need mortgage default insurance. Other circumstances however may also require mortgage default insurance. At
Early Renewal
You may find yourself wanting to renew your existing ING DIRECT mortgage prior to the scheduled maturity date. Should this be the case, you do have options available that would enable you to take advantage of today's lower rates. If your mortgage maturity is within 120 days of its maturity date, you can renew your mortgage at today's rates, without penalty. If your mortgage maturity date is more than 120 days away, you can blend the interest rate of your current mortgage with the interest rate available today and lock in a new term. Or you can break your mortgage and get a new term at today's interest rate (interest penalties may apply). We can help you assess whether the interest savings outweighs the penalty amount.
Estimated Value
To estimate the value of your home, check your annual property tax assessment provided by your municipality. Please note that the Appraised Value of your property may be different from the value provided by your municipality.
Estoppel Certificate
A document that outlines the legal and financial state of a condominium corporation.
First Mortgage
The mortgage that is registered in first position at the land registry office. If there is more than one loan mortgage registered against your property, the mortgage that is registered first must be paid out first in the event of sale or default.
Guarantor
A person who will make repayments on a loan if the borrower fails to do so. At
High Ratio Mortgage
A mortgage loan for an amount that is more than 80% of the value of the property.
Home Equity
The difference between the value of your home and the total amount of your outstanding mortgage. For the purpose of getting a mortgage, the value of your home is determined by a certified appraiser at the time of the application.
ING Prime Rate
An interest rate set by us that fluctuates according to market conditions and the Bank of Canada's economic outlook.
Interest
The basic amount of money it costs to obtain a loan. Interest is included in your regular monthly mortgage payment. Interest is calculated on the day of each regular payment, based on the outstanding principal amount at that time, so the faster you reduce your principal, the less interest you pay.
Interest Rate
The percentage that will determine the amount of interest that you are required to pay.
Interest Rate Adjustment
Payments on a Variable Rate Mortgage (VRM) can vary throughout its term depending on what happens with ING DIRECT's prime rate - that's why it's called "variable". On your mortgage funding date, the initial interest rate is set, locking in the interest rate spread. Every three months after that (referred to as the Interest Rate Adjustment Date), the interest rate on your VRM is subject to review and possible adjustment, either up or down, if ING prime rate changes depending on whether the prime rate has changed prior to the interest rate adjustment date. If there is a change in your Interest Rate, we will mail you an update outlining your new rate and the change in your payment.
Leasehold Tenure
The right to use property for a set period of time. In other words, you do not own the property.
Liabilities
The amount that you owe to creditors. Examples include mortgages, credit card balances, line of credit balances, personal loans, car loans, etc.
Loan to Value (LTV) Ratio
The Loan to Value ratio describes the principal amount of a mortgage loan in relation to the value of the property.
For example, if your property is worth $100,000 and you made a down payment of $25,000, your required mortgage amount will be $75,000 and your LTV is 75%.
The LTV helps determine whether or not mortgage default insurance is required. LTV of 80% or less will be a conventional mortgage and will generally not need mortgage default insurance. LTV of more than 80% will be a high-ratio mortgage and will need mortgage default insurance. Other circumstances may also require mortgage default insurance.
Lump Sum Payment
Every ING DIRECT unmortgage client can benefit from the use of prepayment options that make it possible to pay off your mortgage faster. Clients can make one time or on-going lump sum prepayments equal to 25% of their original mortgage balance, each mortgage year, without penalty.
Maturity Date
The maturity date is the last day of the term of your mortgage. Any outstanding balance is due on this date. However, if you have an outstanding balance you will usually have the opportunity to renew your mortgage into a new mortgage with a new principal amount, interest rate, term and amortization.
Mortgage
A mortgage is a loan that is secured by property. The word mortgage actually defines the rights over the property given by the borrower (property owner) in exchange for the loan.
Mortgage Default Insurance
Mortgage Default Insurance pays the lender if the borrower defaults on making payments. Such insurance is required by law for high ratio mortgages (those for an amount greater than 80% of the value of the property) and may be required under other circumstances. ING DIRECT accepts mortgage default insurance from Canada Mortgage and Housing Corporation (CMHC) and Genworth Financial Canada. For more information, you can visit their web sites at:
Mortgage Life Insurance
Creditor insurance that pays off the remaining mortgage debt in the event of a borrower's death.
Mortgage Payment
The regular payment of principal and interest under a mortgage payment schedule. At
Mortgage Penalties
A mortgage is set for a pre-determined amount of time or term at funding or when renewed. Should the mortgage term be terminated prior to the maturity date either through sale of the home, early renewal or discharge, the mortgage client could be subject to penalties. The applicable penalties would be equal to the greater of the interest rate differential or 3 months interest plus any applicable fees related to the discharge request.
Mortgagee
The lender – us.
Mortgagor
The borrower – you.
MLS Listing
A report from Multiple Listing Service (MLS) describing the details of a property, including property taxes, measurements and features. It is provided by your real estate agent.
Number of Units
The number of self-contained living spaces within the property. For example, a self-contained living space would include a separate entrance, a kitchen, bathroom and living quarters that could be rented out.
Portable Mortgage
A mortgage you can take with you to your new home at your current rate, term and mortgage amount (or increase it with a blended rate). All our mortgages are portable.
Pre-Approved Mortgage
We can pre-approve a mortgage to a set maximum principal amount even before you find a house. This will guarantee your interest rate for 120 days on fixed term loans and can help you establish a price range in which to search for a home.
Prepayment Interest Rate Differential Amount
When the borrower pays off a loan before maturity at a time that interest rates are lower than the borrower's loan, the prepayment interest rate differential amount represents the difference between interest that the lender would have obtained from the borrower if the borrower kept with the loan, and interest that the lender can obtain under current interest rates.
For example, if the borrower pays out a loan with an interest rate of 7% and three years remaining at a time when the interest rate for a three year loan is 5%, the prepayment interest rate differential amount will represent 2% interest for three years on the outstanding balance at the time of payout.
25/25 Prepayment Options (Flexible Prepayment Options)
The prepayment options allow you to prepay some of the loan above and beyond your regular scheduled payments, at no charge – which could save you thousands over the life of your mortgage.
- Make a principal payment of up to 25% of the initial amount, annually
- Increase your regular mortgage payments by up to 25% of the initial payment amount, annually
Primary Borrower
The person whose name appears first on the Mortgage or Credit Account documents. There can only be one Primary Borrower.
Principal
The amount of money that you borrow.
Property Legal Description
The legal description of a property as described in the land registry office. Property legal descriptions look different based on the location of the property. The description can be typically found on a municipal property tax assessment.
Purchase Price
The actual amount paid to purchase the property. This does not include any fees associated with the purchase (such as land transfer tax, legal fees, insurance, etc.) or interest to be paid on the mortgage.
Rate Hold
If you are considering applying for a mortgage, but you're not ready to apply yet, the rate hold could be for you. ING DIRECT's rate hold program essentially holds a fixed rate or the spread on a variable rate for up to 120 days from the date of request without having to apply. It can only apply to one interest rate, for one term at a time. If you apply and fund a mortgage within the 120 days of the rate hold start date, you will receive the lowest rate during this period.
Security
A property or other asset offered as collateral for a loan. In the case of a mortgage, the property you are purchasing or refinancing forms the security for your loan.
Spread
For a Variable Rate Mortgage, it is the difference between ING Prime and our actual (posted) rate. So if ING Prime is 4.00% and our rate is 5.00%, the spread is 1.00%.
Survey
A document providing details of the boundaries of your property, including measurements and structures.
Term
The length of the loan. We offer mortgages with terms up to 10 years. At the end of the term (on the maturity date), you must repay the outstanding principal amount, if any. Usually you have the option then to make the repayment or to renew the mortgage into a new loan with a new principal amount, interest rate, term and amortization.
Title
The right of ownership over the property.
Title Insurance
Insurance that protects your title to your property mainly through undiscovered title errors, survey problems, and even against fraud and forgery.
Title Search
A detailed examination of registered title documents to ensure that there are no rights over the property that may affect the owner's title.
Variable Rate Mortgage
A mortgage that has an interest rate that fluctuates over time.
Zoning
Geographic zones in a municipality designated for specific uses. For example, zoning by-laws will designate the types of buildings that can be built in certain places, such as residential, industrial, or commercial.
