CANADIAN MORTGAGE GLOSSARY TERMS

Here is a simple glossary of Canadian
mortgage lending and finance related
terms.
To find the term you are looking for
quickly, simply click on the letter below.

 

A  B  C  D  E  F  G  H  I  J  K  L  M  N  O  P  Q  R  S  T  U  V  W  X  Y  Z

F

Face Rate
The contractual interest rate stated in a mortgage document or other financial instrument.

Face Value
The face value of the loan is the amount of money the borrower promises to repay (at the contract rate of interest).

Fair Market Value
The highest price that a buyer would pay for a property and the lowest price a seller is willing to accept.

FAQ
An acronym for frequently asked questions. Most Web sites have an FAQ page to provide their customer's with answers to commonly asked questions.

Fee
An inheritable estate in land. The right of ownership of a property.

Fee Simple
The highest estate or absolute right in real property.

Fee Simple Defeasible
When a person has outright ownership of real estate (free of any liens or other claims against title), but the use of the property is restricted.

Fiduciary
An individual or a trust institution charged with the duty of acting for the benefit of another party as to matters coming within the scope of the relationship between him or her. The relationship between a trustee and a beneficiary is an example of a fiduciary relationship.

Fiduciary Duty
A requirement that someone in a position of trust, such as a banker, real-estate agent, or title agent, must act in good faith and trust on behalf of a client.

Field Changes
Modifications that are made to a building or structure while on-site as opposed to planned changes that are incorporated into building plans.

Filing Extension
A filing extension gives an individual more time to file his or her tax return, but it does not give the person more time to pay taxes.

Final Order of Foreclosure
A judgement which extinguishes the mortgagor's (defendant's) equity of redemption and beneficial title goes over to the mortgagee. With an equitable mortgage, the equitable estate is forfeited and transferred to the mortgagee.

Finance Canada
A Federal Department that is responsible for Canada's economic performance and the regulation of financial institutions.

Finance Charge
Charges that include all of the interest expected to be earned over the life of a loan, in addition to the service charges, mortgage insurance premiums, and other loan-related charges.

Finder's Fee
A fee or commission paid by a lender to a mortgage professional for referring a mortgage loan.

Firm Commitment
A promise made by a lender to give a borrower a loan based on certain terms and conditions at a specific time.

First Lien
A primary claim made by the lender for satisfaction of outstanding debt. A first mortgage creates a first lien.

First Mortgage
A mortgage registered before all others on title.

Fiscal Deficit
When the government spends more money than it receives in revenue over the course of one year.

Fiscal Policy
The policy pursued by the Federal Government to direct the economy through taxation and the level and allocation of public spending.

Fiscal Year
 A corporation's fiscal year. Some companies do not use the calendar year for their bookkeeping.

Fiscal Surplus
When the government receives more in revenue than it spends over the course of the year.

Fixed Assets
Fixed Assets are typically long term in nature. The value of fixed assets to a company lies in their use in producing goods and services, rather than in their sale value. Fixed assets wear out over time or otherwise lose their usefulness.

Fixed Expenses
Fixed business costs that do not change regardless of business volume, such as property rental, insurance payments, utilities, etc.

Fixed Installment
A set payment that is made towards the balance of a loan. Fixed installments are set amounts that do not change and are typically made once a month.

Fixed Rate Mortgage (FRM)
A loan in which the interest rate and payments remain the same for the entire life of the loan. The interest rate and payment amounts are set at the time of loan origination.

Fixed-Return Instruments or Vehicles
Instruments that pay a fixed rate of interest for an agreed-upon length of time such as term deposits, Treasury bills, and Guaranteed Investment Certificates.

Fixed Time
The dates during the year when a timeshare owner is scheduled to occupy the property being shared.

Fixer-upper
A house that is sold for less than market value or for a discounted price because it requires significant maintenance or repairs.

Fixture
An article of personal property that has been so attached or wrought into land, or a building on land, that it becomes part and parcel of the land and may only e removed with the consent of the owner of the land. An article of personalty that has been so attached to real estate as to become a part thereof, even though it may retain its separate physical identity. Any chattel that has been so affixed to land that, in the view of the law, it has taken on a nature that makes it part of the land, loses its character as a chattel; it becomes a part of, and passes with, the ownership of land (thus, in the US, a fixture is referred to sometimes as a ‘chattel fixture’); “a fixture is a former chattel which, while retaining its separate physical identity, is so connected with the realty that a disinterested observer would consider it a part thereof.

Flat Fee
A dollar amount requested by a broker instead of being paid commission, which is usually a percentage of the sale.

Float

  1. The amount of time banks take to clear or reject (bounce) cheques for payment.
  2. The amount of time at which funds are debited from the issuer's account.

Flood Insurance
A policy that pays the homeowner for damage caused by flood waters. The policy does not cover damage from falling water, such as rain that may cause a roof to leak.

Flood Plain
Land that is prone to inundation (being covered by water).

Florida Room
An enclosed porch that is built on the back or side of a dwelling and is often air-conditioned.

For Sale By Owner
When a homeowner tries to sell his or her property without help from a realtor. Many homeowners attempt to sell on their own to avoid paying a high commission to a realtor.

Forbearance
The waiving of a covenant in a mortgage document.

Foreclosure
A legal remedy available to a mortgagee where there is default under any of the covenants in the mortgage. It deprives the mortgagor of their equitable right to redeem.

Foreign Currency
The metal (coin) or paper medium of exchange that is used in other countries. For example, the US dollar is considered foreign currency to those living in Canada.

Foreign Currency Surcharge
A fee charged by a credit card company for purchases made in a foreign currency.

Foreign Exchange
Instruments (such as paper currency, notes, and cheques) used to make payments between individuals, organizations, or countries that use different currencies.

Foreign Exchange Rate
The value of one nation’s currency in comparision to another nation’s currency.

Forfeiture
Something that is lost or surrendered as a penalty because of a fault, mistake, or failure to meet legal or contractual obligations.

Four Pillars
Refers to the main types of financial institutions: banking, trust, insurance, and securities.

Franchise
An contract between a company and another party in which the company gives the other party the right to use the company's name and to sell or rent its products. This right is usually purchased for cash in addition to a royalty fee or a percentage of all sales. Selling franchise rights is a popular method for expanding a business quickly with a minimum of capital.

Freehold Estate
An estate in land or real property of uncertain duration that is either of inheritance or for the life of the tenant. There are three (3) freehold estates: fee simple, fee tail and life estate.

Fresh Start
After a bankruptcy, the debtor is essentially given a clean slate or fresh start to rebuild his or her credit with little or no debt.

Fringe Benefit
Compensation that is given to employees in addition to wages, tips, or salaries. Such benefits can include health insurance, life insurance, and pension plans.

Front-end Money
Funds required to start a development and generally advanced by the developer or equity owner as a capital contribution to the project.

Full Income Verification
Refers to a requirement where a potential borrower must show complete and accurate proof of income when applying for a loan. These types of loans usually offer lower interest rates than no-income or "no-doc" verification loans.

Full Market Value
In reference to property taxes, refers to the tax rate that is applied to 100 percent of the property's value. Also known as full cash value.

Futures
Contracts to buy something in the future at a price agreed upon in advance. Futures first developed in the agriculture commodity markets, but often involve foreign exchange, Eurodollar deposits, and government bonds.


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