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.

 

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T

Take-out Loan
A first mortgage loan that is committed and expected to be made upon completion of a property with the loan proceeds to be used to repay an interim or construction loan.

Tangible Personal Property
 Assets other than real estate that physically exist. Business equipment and vehicles are tangible personal property whereas stock certificates and franchises only represent value and are therefore intangible property.

Tax Certificate
A certificate from the appropriate taxing authority giving the status of real estate taxes or other assessments affecting the property.

Tax Deduction
 An allowable (by government) expense that can be subtracted from income before calculating income tax.

Tax Deferral
 A method used to postpone current year taxes to a later year. This is typically done by recognizing income or a gain at a later time. It is important to remember that using tax deferral only delays tax liability, it does not eliminate it.

Tax Exempt
 Income that is not subject to taxation. It is important to note that income exempt from federal taxation is not necessarily exempt from provincial taxation.

Tax Liability
 The total amount of tax owed by an individual.

Tax Lien
 A claim or obstacle that prevents the sale of a property due to unpaid taxes. The property title cannot be transferred until all liens are cleared.

Tax Sale
 Property that is sold by the government to recover unpaid taxes.

Tax-sheltered
 A savings or investment plan that offers significant tax savings.

Taxable Income
 Income that is subject to taxation after accounting for adjustments, exemptions, and deductions.

Tear-down Condition
 A property that is purchased for the sole purpose of tearing it down to build a newer house. These types of properties are generally located in desirable locations with spectacular views or amenities.

Teaser Rate
 The the below-market interest rate that is offered by lenders or credit card companies to gain new business. Offering a below-market interest rate often encourages people to switch credit cards or lenders to save money. Also known as an introductory rate.

Tenancy by the Entirety
 The ownership of a property by spouses where each spouse owns an undivided interest in the entire property. When one spouse passes away, the other holds title to the entire property.

Tenants in Common
An ownership of property by two or more persons, each of whom has an undivided possessory interest, which may be voluntarily transferred by alienation device or descent and is not subject to any rights of survivorship.

Tenure
The manner or system of holding lands or tenements in subordination to some superior right, which in the feudal ages was the leading characteristic of real property ownership.

Term
1. A limited or set period of time. 2. When dealing with a mortgage, term refers to the length of time in which a borrower agrees to pay back the lender. The interest rate and payment schedule is also predetermined. The interest rate typically stays constant during the term unless otherwise specified in the loan agreement. For example, a five year fixed rate mortgage has a term of five years.

Term Deposit
 An investment product where a fixed sum of money is deposited into an account for a set period of time with interest paid over the term.

Term Loan
 A loan intended for medium or long term financing that provides cash to purchase fixed assets such as machinery, land or buildings, or to renovate business premises.

Term Mortgage
A non-amortizing mortgage under which the principal is paid in its entirety upon the maturity date. Sometimes called a straight loan.

Third-party Originator
 An individual or company that begins a loan application, but transfers or sells it to a lender.

Time Deposit
 A type of account where deposits are made for a specified length of time (until maturity) at which time the account reverts to another type of account or is "rolled over" for another fixed period of time.

Timeshare
 A form of property ownership where multiple owners take turns using the property at designated times throughout the year. Timeshares are typically vacation homes located in resort destinations.

Title
The means of evidence by which the owner of land has lawful ownership thereof.

Title Company
 A company that reveiws a property's title prior to its sale. The company looks for any liens or claims and works to fix any issues that are found. They also supervise the closing transaction and ensure that final money transfers are processed correctly.

Title Defect
 A legal claim made by an external party against the property or the right of another party to make demands upon the property owner.

Title Insurance Policy
A contract by which the insurer, usually a title insurance company, agrees to pay the insured a specific amount for any loss caused by defects of title to real estate, wherein the insured has an interest as purchaser, mortgagee or otherwise.

Title Report
 A report that reveals any competing claims, liens, or other problems relating to a property. A title report is required before title insurance will be issued. Also known as a "Preliminary Title Report" or "Prelim."

Title Search
An examination of public records to determine the state of title.

Torrens System
The Land Titles System as originated in Australia by a Mr. Torrens in 1858.

Total Debt Service Ratio (Single Family)
The ratio of an amount equal to the annual mortgage charges and acceptable installment account payments to an amount equal to the effective gross annual income of the borrower.


Total Expense Ratio
 The percentage of monthly debt payments compared to total before-tax income.

Trade Equity
 The exchange of property as part of a down payment when opting to buy another property. Other properties and vehicles are commonly used in trade equity as partial down payment.

Trade-in Value
 When purchasing a new vehicle, the dealership will accept your existing vehicle as a partial or full payment towards your purchase.The amount credited is typically five percent below the wholesale value of the vehicle.

Trading Down
 When a more expensive property is sold to purchase a less expensive property.

Trading Up
 When one property is sold to buy a more expensive property.

Trans Union
 One of the major Canadian credit bureau companies along with Equifax.

Transaction
 A record of business conducted such as an action in a bank account. It may be a deposit, withdrawal, debit card payment, service charge, or interest payment.

Transaction Date
 The transaction date refers to a calendar date when goods or services were purchased or when banking transactions such as cash advances, deposits, and withdrawls were made.

Transfer of Charge
Assignment of a mortgage.

Travellers' Cheques
 Travellers' cheques are accepted just like cash, but they offer more security to travellers because they can be replaced if lost or stolen. These cheques can be purchased through your bank. Some banks charge a fee for travellers' cheques while others include the fee in customer service packages.

Treasury Bills (T-Bills)
 Short-term government obligations that are payable to the bearer and sold on a discount basis; the difference between a T-bill's market or discounted price and its face or redemption value is effectively interest if the T-bill is held to maturity.

Trust
 A trust is a fund that is set up similar to a will. The trust specifies how money or property will be disbursed, it lists the recipients or beneficiaries, and names one or more trustees to manage the assets. An irrevocable trust cannot be changed after the terms are finalized; a revocable trust has more room for how much can be transferred, but it is usually more expensive to maintain.

Trust Account
 An account used by a law firm or real estate agent to control funds set aside for costs associated with a real estate transaction. This account also holds any other money put forth by the buyer and seller before the closing.

Trustee
 An individual that manages assets or holds legal title to property in order to administer it for a beneficiary.

Trust Deed
A written instrument duly executed, sealed, and delivered, conveying or transferring property to a trustee, usually but not necessarily covering real property.


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