CALL OPTION (PROVISIONS, RIGHTS):
A lender's right to demand payment of the outstanding balance of the loan at a time specified in the loan agreement.

CANADA MORTGAGE AND HOUSING CORPORATION (CMHC):
A federal body set up to insure mortgages of up to 95% of the purchase price for homebuyers.

CAP:
A limit. In variable rate mortgages, a limit as to how high periodic payments may go or how much the interest may change within a given time period or over the life of the mortgage.

CASH RESERVE:
An amount of money that the purchaser of a property still has after the transaction closes. Some lenders require a certain level of cash reserve (equal to two payments) before granting a mortgage.

CASH-OUT REFINANCE:
When an owner renegotiates or negotiates a new mortgage and the proceeds of the new financing exceed the money required to pay out the old mortgage and any other costs, liens or expenses, leaving money for the borrower.

CEILING:
The limit over which the interest rate on a variable rate mortgage may not rise over the life of the loan.

CHANGE FREQUENCY:
Term describing the period of time between changes in the interest rate and/or payments of a variable rate (adjustable rate) mortgage or loan (i.e. one week, one month etc.).

CHARGE:
Also known as Mortgage. Indebtedness secured by real property and registered as an encumbrance on title to that property.

CHARGEE:
Also know as Mortgagee. The lender of money in a loan secured against property (often a Bank, Trust Company or Credit Union).

CHARGOR:
Also known as Mortgagor. The borrower of money under a charge and, usually, the owner of a property on title to which a charge is registered.

CHATTEL MORTGAGE:
A debt secured against items of personal property rather than against land, buildings and fixtures.

CLOSED MORTGAGE:
A land loan that cannot be prepaid or re-negotiated before the end of its term without the payment of an interest penalty.

CLOSED-END MORTGAGE:
A mortgage with a set principal amount which cannot be increased or extended during the life of the mortgage.

COLLATERAL:
Property (real or personal) which is pledged to secure a loan or mortgage. If the debt is not paid, the lender has the right to sell the collateral to recoup the outstanding principal and interest on the loan.

COLLATERAL MORTGAGE:
A loan which is secured by some sort of written note of indebtedness (such as a Promissory Note) which is secondarily secured by a mortgage registered against a property.

COLLECTION:
The act of pursuing a debtor who is delinquent on his loan payments.

CO-MAKER:
Also known a "Guarantor". Someone who signs a loan document along with the principal borrower, pledging to be responsible for the loan should the borrower fail to pay it.

COMMITMENT:
A promise, usually in writing, to provide a mortgage or other loan. May also be used in insurance field. Sets out details of mortgage, insurance. Often referred to as Commitment Letter or Binder.

COMMITMENT FEE:
The fee charged by the lender to commit itself to a mortgage or loan on specific terms.

COMPOUND INTEREST:
As opposed to simple interest. The accumulation of interest on a loan over time where interest is charged not only on the principal of the loan but also on all interest accrued against the principal to the end of the last compound period.

CONSTANT PAYMENT LOAN:
A type of loan which requires equal, periodic payments over a certain term, at the end of which the amount owing under the loan will be completely paid out.

CONSTRUCTION LOAN:
A structured, short-term loan to a builder or developer to allow for the development of land. Funds are advanced at certain stages of the development project to pay for specific expenses, fees or costs.

CONSUMER REPORTING AGENCY (OR BUREAU):
Also known as Credit Bureau. The source to which the banks or other lenders turn for information on the credit history of an applicant.

CONVENTIONAL LOAN:
1. A loan or mortgage to which the normal rules of such transactions apply without the inclusion of a government program (i.e. CMHC, VA or FHA insurance).
2. A loan or mortgage with a fixed interest rate, fixed payments and a fixed term.

CONVERSION CLAUSE:
A provision in a variable rate mortgage (adjustable rate mortgage) which allows the borrow to change the mortgage to a fixed rate mortgage upon the occurrence of certain events.

CONVERTIBILITY CLAUSE:
See "Conversion Clause".

COVENANT:
A promise contained in a contract or agreement.

CREATIVE FINANCING:
An arrangement for the financing of the purchase of a property which is outside the normal practice of residential financing.

CREDIT HISTORY:
A statement of the debts and obligations, whether current or past, of a person which helps a lender to assess the risk of a loan to that person.

CREDIT LIFE INSURANCE:
A form of insurance which is designed specifically to pay out the debts of the insured person in case of their death.

CREDIT LIMIT:
The maximum amount available to a person under a loan, credit card or other borrowing arrangement.

CREDIT RATING:
Based on an analysis of a person's credit history, an evaluation of that person's ability to manage a new debt or debts overall.

CREDIT RISK:
The potential for a borrower to fail to live up to her obligations under a loan arrangement.

CREDITOR:
Any person to whom money is owed. May be secured (the debt has been registered against the property of the debtor) or unsecured.

CUMULATIVE INTEREST:
The total amount charged as interest on a loan or mortgage to a certain date.