Glossary N

NEGATIVE AMORTIZATION
Occurs when your monthly payments are not large enough to pay all the interest due on the loan. This unpaid interest is added to the unpaid balance of the loan. The danger of negative amortization is that the home buyer ends up owing more than the original amount of the loan.

NEGATIVE GEARING
When the investment return is not sufficient to meet the interest costs of the loan that was used to fund the investment.

NET EFFECTIVE INCOME
The borrower’s gross income minus federal income tax.

NET WORTH
The difference between total assets and total liabilities.

NEW SALE
The sale of a unit direct by a developer before the issuance of the Certificate of Statutory Completion and the Subsidiary Strata Certificates of Title or the Certificates of Title for all the units in the development.

NON-ASSUMPTION CLAUSE
A statement in a mortgage contract forbidding the assumption of the mortgage without the prior approval of the lender. Note: The signed obligation to pay a debt, as a mortgage note.

NON-LANDED PROPERTY
Apartments and condominium housing.

NOTARY PUBLIC
One authorized by law to acknowledge and certify documents and signatures.

NOTE
A written promise to pay a certain sum of money at a certain time. A negotiable note starts “Pay to the order of” and is transferable by endorsement similar to a check.

NOTICE OF DEFAULT
A formal written notice to a borrower that a default has occurred and that legal action may be taken.

NOVATION OF LEASE
An existing tenant assigns all the tenancy rights to an incoming tenant.
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