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Canada Mortgage and Housing Corporation (CMHC) [back to top]
The National Housing Act (NHA) authorized Canada Mortgage and Housing Corporation (CMHC) to operate a Mortgage Insurance Fund which protects NHA Approved Lenders from losses resulting from borrower default
Cap Rate [back to top]
The highest rate that a borrower will pay within a defined time period. Examples of the cap rate are (1) the rate stated on the commitment letter or mortgage pre-qualification for the maximum rate that will be paid by the borrower during the term of a protected variable rate mortgage.
Capitalization Rate [back to top]
This is the rate of return an investor hopes to achieve through investment in a property.
Capitalized Value [back to top]
The value of a property based on the net income.
Caveat Emptor [back to top]
A Latin statement whose translation is "Let the buyer beware". In terms of purchasing a home or property, a buyer must fully examine all aspects of the transaction before agreeing to the purchase.
Certificate of Location or Survey [back to top]
A document specifying the exact location of the building on the property and describing the type and size of the building including additions, if any.
Certificate of Search or Abstract of Title [back to top]
A document setting out instruments registered against the title to the property, e.g. deed, mortgages, etc.
Certificate of Title [back to top]
The sequence of conveyances and encumbrances that affects a title to land, from the time of the original patent or as far back as records are available.
Charge [back to top]
The name applied to a mortgage document when title is registered under the Land Titles Act. A "charge on title" is any encumbrance or claim that affects title to property.
Chattel Mortgage [back to top]
An encumbrance that is against moveable possessions or personal property ("chattels") that may be removed without damaging to the property.
Closed Mortgage [back to top]
A mortgage whose terms state that it cannot be paid out, even with a penalty, unless the lender agrees.
Note that in some cases, a closed mortgage may be paid for in full but at a defined cost such as the interest rate differential (IRD) or sometimes with a punitive penalty such as full interest to maturity.
Closing [back to top]
The final exchange of consideration and legal documents completed at the endo of a house purchase or mortgage registration (or both) transaction.
CMHC [back to top]
The Canada Mortgage and Housing Corporation (CMHC) is a Canadian federal government crown corporation which administers the National Housing Act. One of the services provided by CMHC is the insuring of high ratio mortgage loans for lenders.
Collateral Mortgage [back to top]
A mortgage where a promissory note is used to securee the loan.
Collateral Security [back to top]
A form of security that one pledges as a way to reduce the risk of a mortgagee.
Commitment Letter [back to top]
A written letter from the lender stating that they will lend mortgage funds to a specified borrower (or borrowers) as long as certain conditions are met within a specified period of time period before the closing date. A key component of the commitment is the "rate hold" - this is where a lender may put a "cap" on the mortgage rate for a defined period of time (e.g. 60 days or 90 days), particularly in a period of volatile interest rates. For new homes, commitments on financing may have longer closing dates and can be negotiated between the lender and the builder and be held for as long as 6 months or even a year.
Completion Date [back to top]
The date on which your purchase will complete and money will change hands between you and the sellers.
Completion Loan [back to top]
A mortgage loan granted following the satisfactory completion of construction or repairs.
Compliance Letter [back to top]
A compliance letter may be required in some municipalities before a property transfer can take place. This letter acknowledges that a property either is clear of outstanding work-orders such as those that specify clean-up or repair requirements that an owner must complete before a transfer of ownership.
Compound Interest [back to top]
Interest on both the principal and interest that has accrued.
Condition Precedent [back to top]
An event or action necessary before an agreement becomes binding; also known as a "subject clause".
Condition Subsequent [back to top]
A condition referring to a future event upon which the contract is no longer binding on the parties.
Condominium [back to top]
The ownership of separate space within in a multiple dwelling or other multiple-ownership of common elements that are used jointly among other owners.
Connection Charges [back to top]
Charges that utility companies charge a fee on closing to connect new buyers to their services.
Consideration [back to top]
An item of value given to make a promise of repayment enforceable.
Construction Advance [back to top]
A sum of money advanced to the borrower in the form of a construction loan.
Construction Lien [back to top]
A claim against property that is pursuant to labour, services, or materials supplied.
Construction Loan [back to top]
A mortgage that is advanced in pre-determined stages, according to the amount of work completed, for a construction or building project.
Construction Loan Agreement [back to top]
An agreement set between a builder and lender that establishes the terms of an agreement (the loan amount, rate, method of drawing funds, conditions for advancing).
Contract [back to top]
An agreement between two or more parties given receipt of lawful consideration to do or refrain from doing some act.
Conventional Mortgage [back to top]
A mortgage usually amounting to 75% Loan to Value ratio (or less) of the property value.
Convertible Mortgage [back to top]
A mortgage that does not exceed 75% of the purchase price of the home. Mortgages that exceed this limit must be insured against default, and are referred to as high-ratio mortgages (see below).
Conveyance [back to top]
A written agreement used for the transfer of mortgage, charges, or leases etc.
Covenant [back to top]
An agreement contained within a mortgage document that creates an obligation; the agreement may be positive, i.e. it stipulates the performance of certain acts, or it may be negative or restrictive, i.e. it forbidds the commission of certain acts.
Credit Report [back to top]
A report, available from at a credit bureau, that specifies an individual's payment history. Anyone who wishes to obtain a credit report can order a copy of their report by contacting their local credit bureau.