Mortgage Glossary

A private mortgage insurance company, owned by Brookfield. Sagan is the largest private provider of Mortgage Default Insurance in Canada and competes with CMHC for this business.

Taxes may be applied based on the purchase price of a property. Many properties are exempt from sales tax (GST and/or PST). For instance, residential resale properties are usually exempt. However, others, like newly built properties are not exempt and require the buyer to pay GST. Before signing your offer, be sure you understand the tax implications.

A mortgage registered on title to a property but ranking in priority immediately below a first mortgage. If the borrower defaults and the property is sold, the second mortgage does not get paid until after the first mortgage is paid off in full.

Being self employed generally means you own and operate the business where you work. Many borrowers who are self-employed have good credit and strong finances but cannot provide the traditional means of income verification often required by lenders. Don’t worry, most lenders offer mortgages to Self-Employed Borrowers, but the Underwriting process requires additional documentation (usually tax documentation and company documentation) to verify the Borrower’s income.

A type of mortgage where the mortgage lender has a claim against the property for the amount of the mortgage. The charge is registered as a lien on the property financed by the mortgage. This is the most common type of lien used by Canadian mortgage lenders. If the borrower fails to make the required payments, the lender can take legal action to enforce their rights under the mortgage charge and recover the amounts that are owed. Their legal remedies include a right to sell the property.

When you have a variable-rate mortgage with a fixed payment amount you have a Static Payment. The mortgage payment amount is fixed for the term of the mortgage and does not change when interest rates change.

The most common Sub-Prime Mortgage is a mortgage that is made to a less credit-worthy Borrower. For example, someone who may have poor credit, insufficient income or a lack of documentation. Sub-Prime Mortgages carry higher interest rates to compensate for the additional risk.