Glossary of Terms

A common prepayment penalty method where the lender calculates the difference between the total interest you would have paid for the remainder of your term and the amount of interest they will earn from a new mortgage (with a new client) at current rates for the same amount of time as the remainder of your contract.  An IRD  penalty is intended to compensate the lender in circumstances where the interest income the lender will receive on the new mortgage is less than the interest they were going to receive on the existing mortgage, and is therefore usually only applicable if current interest rates are lower than that of the original mortgage.

Short-term financing to help a buyer bridge the gap between the closing date on the purchase of a new home and the closing date on the sale of the current home.

In BC, there are two types of property ownership structures: Joint Tenancy and Tenants in Common.

With joint tenancy, two or more people own property in equal undivided portions, each with an equal right to the whole property. In this arrangement, if a joint tenant dies the property immediately becomes the property of the surviving joint tenant(s) and does not become part of the deceased person’s estate.

The benefits of joint tenancy are in avoiding the estate settlement process and the taxes and probate period that go along with it.  The surviving tenant(s) can continue to use the property and can mortgage or sell it immediately as they wish, rather than being forced to wait the sometimes lengthy period of estate probate before being able to make financial adjustments.

The drawbacks of joint tenancy is that ownership of the property must be equal among all tenants and no tenant can act independently of the others. For example, a joint tenant cannot sell or gift their ownership in the property to another person without the consent of the other joint tenants.  Along the same lines, a joint tenant cannot pass down or bequeath the property through a will without the equal participation and agreement of all other joint tenants.

Joint tenancy is generally advised for properties owned by spouses, because the benefits of immediate transfer of ownership on death are useful for the surviving spouse while the drawbacks of requiring agreement between tenants for property decisions will not usually be a problem.  It is typically desirable in spousal relationships for property to transfer to the surviving spouse as the sole beneficiary, and if both spouses were to die at the same time they would have a joint estate that the property would go to and be divided among their joint beneficiaries.

The above is general advice only, as with either form of property ownership there are significant potential tax and legal issues to consider.  We strongly recommend consulting both an accountant and a solicitor before making a final decision on the type of ownership structure for any property purchase.

For more information on the other type of property ownership, see Tenants in Common.

A letter of employment is written by your employer (manager or HR department) to confirm the details of your employment. It is typically a requirement when you are a casual, part-time or full-time employee.

A letter of employment should be written on company letterhead and satisfy the following:

1. state the start date of employment
2. state the current position
3. confirm part-time or full-time
4. provide details of the income structure (number of guaranteed hours per week, hourly wage, etc.)
5. be signed by the author with their contact information

If your company pay statement (pay stub) does not show your Year To Date (YTD) income amount, please request that this also be included in your Letter of Employment.

You can download a Sample Letter of Employment PDF for a better understanding of the typical phrasing used.

In order to purchase a property where the primary residence is a manufactured home, lenders will often require confirmation that the home was built to approved standards by requesting a photo of the CSA label affixed to the home.  This label is usually found on the electrical panel.

The design of this sticker has changed over the years, but it will always have the trademark CSA logo and will usually reference either “Z240” or “A277” series.

The following are some examples of CSA labels you might find on a manufactured/mobile home (your label may match one of the examples below, or it might be slightly different):

Last day of the mortgage term.  Your mortgage must be renewed with the current lender, switched to a new lender, or paid out on this date.

Both mortgage life insurance and mortgage disability insurance are available and should be considered by all buyers.  Many buyers are qualifying based on two incomes and they should consider how they would pay their mortgage payments if one income ceased due to disability or death.  If mortgage insurance is declined, it it common practice to have a waiver signed to protect all parties.

Most lenders send out an annual mortgage statement at the beginning of each calendar year, which provides details on the total mortgage activity of the previous year.  Some banks also allow you to download electronic PDF mortgage statements through online banking, but this will depend on your bank and your statement preferences.

To be an acceptable mortgage statement for our use in helping you to qualify for a new mortgage or refinance an existing mortgage, it is important to confirm a few things:

1. The statement is the most recent Annual mortgage statement
2. The statement refers to the mortgage of the right property (if you own multiple properties, the statement may be addressed to you at your personal residence, but pertains to a mortgage on a different property)
3. You have all pages of the statement (even if they don’t seem to contain useful information)

The length of time the current mortgage agreement applies between mortgagee and mortgagor -usually range from six months to 10 years.

The lender is the mortgagee and the borrower is the mortgagor.