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Acceleration Clause [back to top]
A clause in the mortgage document that accelerates the maturity date of the mortgage; the clause states that upon default, the principal sum of the mortgage and accrued interest is due.

Accrued Interest [back to top]
Interest that has accumulated unpaid since the last payment date.

Add-On Interest [back to top]
Interest amount that is added to the principal of a debt and made payable as part of the debt, usually in equal periodic installments.

Adjustable Rate Mortgage (ARM) [back to top]
A mortgage where the interest rate is adjusted periodically according to movements in a pre-selected index such as the Bank of Canada Prime Rate.

Adjustments on Closing [back to top]
Two types of adjustments that a buyer can be charged on closing are:

1. prepaid services, where the sellers have prepaid property taxes or certain utilities (the buyers can be charged for the amount of prepayment on a pro-rata basis depending on the date of occupancy), and
2. interest, where the amount of interest required to be prepaid up to the interest adjustment date (the interest adjustment date is the date where the mortgage interest starts accumulating "in arrears".

Adjustments on Closing [back to top]
Two types of adjustments that a buyer can be charged on closing are:

1. prepaid services, where the sellers have prepaid property taxes or certain utilities (the buyers can be charged for the amount of prepayment on a pro-rata basis depending on the date of occupancy), and
2. interest, where the amount of interest required to be prepaid up to the interest adjustment date (the interest adjustment date is the date where the mortgage interest starts accumulating "in arrears".

Affidavit [back to top]
A statement of declaration in writing and sworn or affirmed before an authorized individual.

Agency [back to top]
A relationship which arises out of a contract where an agent is authorized by a principal to engage in certain acts, e.g. dealing with one or more third parties.

Agency Law [back to top]
This type of law defines the underlying working relationship in real estate. Note that this is not legislation or a statute; agency law is common law or case law based on accumulated judgements from court cases.

Agent [back to top]
An individual or corporation licensed by the provincial government to trade in real estate.

Agreement Of Purchase And Sale [back to top]
A legal agreement that offers a certain price for a home. The offer may be firm (no conditions attached), or conditional (certain conditions must be fulfilled before the deal can be closed). eg: the purchaser includes a "subject to financing" condition that protects the purchaser if financing cannot be secured.

Amortization [back to top]
The paying down of the principal balance of the mortgage by equal periodic payments (and occasional extra payments) of principal at regular intervals over a target period of time (typically 25 years).

Amortization of a Mortgage [back to top]
The gradual retirement of a mortgage by periodic payments of the principal.

Annual Percentage Rate (APR) [back to top]
The yearly interest percentage of a mortgage expressed by the actual rate of interest paid, given the term, rate, amount and cost of arrangement.

Appraisal [back to top]
An estimate of the current value of the 'subject property' for the lender using (1) a market value comparison approach, which comparing recent sales of similar properties and adding and subtracting the differences in value of the same features in the subject property, or (2) the "depreciated cost" approach, whereby the land value is estimated and added to an estimate of the depreciated building value.

Appraised Value [back to top]
An estimate of property value written by a qualified individual - usually for for mortgage lending purposes (note that an appraisal may not reflect the market value of the property or the purchase price).

Arrears [back to top]
To be in arrears is to be behind in the payments called for as part of the mortgage agreement.

Assessed Value [back to top]
An amount assigned to taxable property for the purpose of calculating property taxation.

Assessment [back to top]
An "assessment" is the value of a property that is a historical, static estimate of the value of a property used by municipal governments as a basis for calculating annual property taxes.

Assessment Notice [back to top]
An "assessment notice" contains the "assessed value" and is used to calculate the property taxes for the year (property taxes = assessed value * current "mill rate").

Assignee [back to top]
One who takes the rights or title of another by assignment.

Assignment of Interest [back to top]
Most Provinces allow a legal assignment of interest in a mortgage to have full legal effect without first having to discharge and recreate the existing mortgage.

This is particularly useful in (1) a mortgage switch, where the costs of transferring lenders could be very high, and (2) second mortgage, where a postponement may be difficult to obtain.

Assignment of Mortgage [back to top]
The assignment of a mortgagee's interest in the mortgage to a different mortgagee.

Assignment of Rent [back to top]
The redirection of rental income to a mortgagee (usually in the event of default).

Assignor [back to top]
One who transfers or assigns the rights or title to another.

Assumable Mortgage [back to top]
The type of mortgage where a qualified buyer can take over a mortgage from the current owner upon the sale of a property. If a buyer can assume a mortgage, they may do so at a below market interest rate in addition to saving on the legal costs of creating and registering a new mortgage. " Assumption" of a mortgage entails a simple amendment to the mortgage document registered on title (refer to "switch").

Assumption Agreement [back to top]
A document that obligates someone other than the mortgagor to complete the mortgage obligations.

Assumption of a Mortgage [back to top]
The action taken by a purchaser who is responsible for a mortgage debt through a legal agreement; the original covenantor(s) responsibility pursuant to the mortgage obligation remains intact in such arrangement unless it has released by the mortgagee. See Release of Contract.

Authority [back to top]
The legal right given by a principal to an agent to act on the principal's behalf while performing specific acts, e.g. negotiations.