Real Estate Agents ~ Site Map ~ Save Settings
Glossary of Terms
A
Acceptance
Access
Account Review
Accrued
Accrued Depreciation
Accrued Interest
Actual Possession
Adjustment
Adjustable Rate Mortgage
Aesthetic Value
Affidavit
Affidavit of Title
Agent
Agreement
Amortization
Amortization Rate
Amortized Loan
Amortization Term
Amount Due
Annual Percentage Rate
Appraisal
Appraised Value
Appraised Value
Asset
Assessment
Assumption
Arbitration
Arrears

B
Balance
Biweekly Payments
Borrower (mortgagor)
Bridge Loan
Broker
Buy down

C
Caps (Interest)
Caps (Payment)
Capital
Certificate of Inspection
Certificate of Occupancy
Closing
Closing Costs
Closing Date
Closed Mortgage
Commitment Letter
Commissions
CMHC (Canada Mortgage & Housing Corp)
Conditions of Sale
Consumer Price Index
Conventional Loan
Creditor
Credit Report
Credit
Covenants

D
Deed
Debt to Income Ratio
Delinquency Date
Deposit
Discharge
Down Payment
Dwelling

E
Earnest Money
Easement
Equity

F
Fair Market Value
Finance Charges
Financial Institutions
Financing
First Mortgage
Fiscal Year
Fixed Rate
Fixed Rate Mortgage
Floating Rate
Foreclosure
Full Disclosure

G
Good Faith
Goodwill
Gross domestic product
Gross Income
Guarantee

H
Habitable
Hazard Insurance
Home Owner's Insurance
House Price Index
Housing Starts
Housing expenses to income ratio

I
Index
Interest
Interest Rate
L
Legal Description
Lien
Lien holder
Loan to Value Ratio
Lock in interest rate
Loan application

M
Market Value
Maturity
Mean Home Price
Misrepresentation
Mortgage Insurance
Mortgagee
Mortgagor
Mortgage Broker

N
Net effective income
Net Income
New Home Sales
No money down
Notarize
Note

O
Occupancy
Offer
Outstanding Balance

P
Payment Penalty
Penalty
Power of Attorney
Prepaid Expenses
Prepayment
Prepayment Penalty
Prime Rate
Principal
Principal & Interest Payment
Principal
Principal Residence
Principal Interest & Taxes (P.I.T.)
Promissory Note
Property
Property Tax
Pro rate

Q
Qualified Buyer
Quit Claim Deed

R
Rate of Interest
Refinance

S
Sales Contract
Sales Price
Sales Person
Satisfaction of mortgage
Second Mortgage
Simple Interest
Sweat Equity

T
Tax
Title
Title Search

U
Underwriting
Usury

V
Variable-Rate-Mortgage

Y
Yield

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z


A

Acceptance
The voluntary expression by the owner of a property receiving the offer and the agreeing on acceptance to be being bound by the exact terms of the offer in the manner requested by the buyer. The acceptance must be unconditional.


Access
The right to enter or leave the property. Property owners who own adjoining or properties abutting may have their own access rights. These access rights are subject to government limitations.


Account Review
Review of a consumers' credit history by the creditors.


Accrued
An accumulation over a certain period of time - such as accrued depreciation.


Accrued Depreciation
Any diminishing or loss of utility of value of a building from the time of initial construction to present. Accrued depreciation is the difference between what it would cost building new and the current appraised value of the building.


Accrued Interest
Any interest that has not been paid.


Actual Possession
The physical occupancy and control of a parcel of real estate. For example, when a person has clear title to the house and is living in the house - he is in actual possession. Construction possession is when a person has a legal right to the house but is not living in the house.


Adjustment
The amount of taxes, mortgage payments, interest, utilities, legal fees, adjusted by the lawyers.


Adjustable Rate Mortgage
(Variable Rate Mortgage) A mortgage in which the interest rate (and therefore, the monthly payment) can fluctuate up or down during the life of the loan. Depending upon the specific mortgage, the interest rate fluctuates on a monthly basis and is normally tied with the prime lending rate of the Bank of Canada.


Aesthetic Value
The intangible value of property created when the property possesses unique character features that make it attractive.


Affidavit
It means "has pledged his faith." A written statement of facts made voluntarily and under oath before a public official or persons authorized to administer such an oath.


Affidavit of Title
A sworn statement by the seller of real estate that no defects of title, other than those mentioned in the sales contract or deed exist in the title being conveyed.


Agent
One who acts for and in the place of a principal for the purpose of affecting the principle with third persons. The agent has the right to affect the principal's legal relations and is called authority.


Agreement
An expression of mutual consent or meeting of the minds by two or more parties on a proposal.


Amortization
A way that you will repay your mortgage gradually through regular and equal monthly payments of the principal and interest.


Amortization Rate
The percentage of periodic payment that is applied to the reduction of the principal of the mortgage. This corresponds to the sinking fund factor.


Amortized Loan
A financial obligation that is repaid over a period of time by a series of periodic payments.


Amortization Term
The time period over which the principal amount would be retired on the basis of period installments paid.


Amount Due
Normally it is the minimum monthly payment you must make - this is not the total amount you owe.


Annual Percentage Rate
The total cost of the mortgage expressed as a percentage of the loan amount.


Appraisal
An estimate of the value of the property made by a qualified professional called an "appraiser" The property value may be needed by the banker. Your cost will be approximately $250.00 in fees, depending on the distance and complexity of the property being evaluated. Value is normally determined by comparing it to the sale prices of similar properties.


Appraised Value
An estimated value based on the appraisers analysis of data.


Appraised Value
An increase in an asset's market value over it's value at some previous point in time.


Asset
Any holding that has monetary value. Real estate, jewelry, stock & bonds are considered assets.


Assessment
A local tax levied against a property for education, sewer, street lights, street cleaning, etc. (see Property Taxes)


Assumption
The buyer agrees to assume the existing mortgage from the seller. The buyer assumes the payments with the terms and conditions of the mortgage and mortgage debt.


Arbitration
A procedure for resolving disputes out of court by an impartial third party. Both parties agree to abide by the decision of the arbitrator.


Arrears
Money which is not paid on time is considered to be in arrears.


B

Balance
The outstanding amount owed to a creditor on a mortgage or a loan.


Biweekly Payments
The payment frequency on a mortgage loan. Payments may be weekly, biweekly or monthly (see Schedule of Payments) Biweekly payments reduce the principal of the loan at a faster rate compared to monthly mortgage payments.


Borrower (mortgagor)
One who applied for and received a loan in the form of a mortgage with the intention of repaying the loan in full.


Bridge Loan
A normally short term, used by a property owner to purchase real estate pending on the sale of a piece of property. Normally this loan is paid in full when the property is sold.


Broker
An individual or a company engaged in the business of assisting in arranging financing or mortgage loans from creditors but does not normally lend money itself. Brokers usually charge a "finders fee" or receive commissions for their services. (see Mortgage Brokers)


Buy down
A mortgage subsidy that is sometimes offered by a home builder to help buyers afford the property. The builder pays the interest payments for a few months or a few years, thereby lowering the initial interest payments for the buyer.


C

Caps (Interest)
In the adjustable rate mortgages a limit is placed on the upward interest limit and protects the borrower against increased payment levels.


Caps (Payment)
Consumer protection which limits the amount of monthly payments may change (increase) of an adjustable rate mortgage.


Capital
The amount of current assets including current property, investments and cash savings. The capital reassures a lender by providing a means to repay the loan in case of default.


Certificate of Inspection
The warranty requires that the buyers walk through the house with the builder's representative and formally inspect the house. This is normally required by the mortgage lender and the inspection is done 2-4 days prior to date of possession (see Walk Through)


Certificate of Occupancy
A permit required under the building codes of many local governments which indicates the property has passed the final inspection, has met the structural and building requirements and is suitable for occupancy.


Closing
The act of transferring ownership of a property from the seller to the buyer in accordance with the terms of the purchase contract.


Closing Costs
Various fees and expenses payable by the seller and buyer at the time of the real estate transfer of ownership.


Closing Date
The date when the buyer gives compensation in full to the seller and the seller transfers title of the property being purchased to the buyer.


Closed Mortgage
A mortgage loan that has the term and rate fixed and therefore the payments remain unchanged. The mortgage cannot be discharged without penalty, normally 3 months interest is paid to the lender. A portion of the mortgage can be paid annually without any penalty (this varies from lender to lender)


Commitment Letter
A written approval given by the lender to the borrower stating the amount to be advanced, mortgage interest rate , terms of the mortgage loan, etc.


Commissions
An amount earned by a real estate broker for his services.


CMHC (Canada Mortgage & Housing Corp
A Crown Corporation the administers the National Housing Act for the Federal government. Insures mortgage loans for financial institutions holding mortgages with less than a 25% down payment.


Conditions of Sale
A purchase agreement that is subject to certain conditions being fulfilled by a certain time limit for the agreement to be enforceable.


Consumer Price Index
A measurement of the average change in prices paid by consumers for goods and services.


Conventional Loan
A mortgage loan with 25% or more as a down payment. This type of loan is not insured by CHMC.


Creditor
One who is owed monies.


Credit Report
A report from an independent credit rating service (such as. Equifax) listing a person's current obligations to various creditors (including credit card companies, student loans, car loans etc.) A credit report is a required document when applying for a mortgage loan.


Credit
In finance - the availability of money.
In accounting - A liability or equity amount as shown in a General Ledger.


Covenants
A mutual agreement written into Deeds and other contracts agreeing to the performance or non-performance of certain acts, requiring or preventing, certain uses of the property.


D

Deed
A written document, usually under seal, conveying property interest from a Grantor to a Grantee. In order for a Deed to be effective in transferring title, it must be shown in it's proper form and executed as specified by law, in the province the property is located. When the Deed is accepted and delivered, all prior agreements, which are inconsistent with the Deed, have no legal effect. An exception to this rule would be in cases of fraud.


Debt to Income Ratio:
Your income compared to your debt and expressed as a percentage.


Delinquency Date
A specific time after which a penalty is incurred for nonpayment of a debt.


Deposit
Money offered by a prospective purchaser to indicate good faith into entering a purchase agreement. If the purchase is completed, the deposit is applied against the purchase price. However, if the purchaser defaults, the deposit is kept by the builder to cover damages


Discharge
To release a debtor from the responsibility of his/her debt.


Down Payment
The amount of cash paid by a purchaser/s which, when added to the mortgage amount equals the total sale price of the property. At the time of closing, it is often referred to as "Purchaser's Equity."


Dwelling
The building in which a person lives or occupies.


E

Earnest Money
Money given by a buyer to a seller as part of the purchase price to bind a transaction to assure payment.


Easement
A right acquired for access to, or for the use of, another person or person's land for a specific purchase - (such as utility right of way)


Equity
The difference between the fair market value and the current debt owed on the property.


F

Fair Market Value
An economic concept denoting the price in terms of money, at which a willing seller and willing buyer will agree upon when both parties are acting prudently, knowledgeably and under no compulsion.


Finance Charges
The total charges paid to the lender by the borrower directly or indirectly for extension of credit. Law requires that all fees, service charges, commissions, and discount charges are to be shown clearly, to the borrower.


Financial Institutions
An organization that accepts deposits and lends to individuals or corporations in order to make a profitable return - ( i.e. banks, trust companies, pension funds and finance companies)


Financing
The difference between the purchase price and the down payment - commonly referred to as the "mortgage".


First Mortgage
A lien on the property in which the lender's claim is superior to the rights of any subsequent lien positions. This assures less risk to the lender and normally a lower interest rate than a 2nd or 3rd mortgage is offered by the lender.


Fiscal Year
A business year-end used for accounting and tax purposes, as compared to a calendar year.


Fixed Rate
An interest rate that remains constant regardless of economic indicators.


Fixed Rate Mortgage
A mortgage in which the interest rate (and therefore the monthly payments) remains the same for the entire term of the loan. This is a preferred mortgage for most home- buyers.


Floating Rate
A "finance" term used to explain the spread on a variable interest rate loan. This rate is often tied to the prime lending rate.


Foreclosure
A legal procedure by which a mortgaged property, in which there has been default of payments by the borrower, is sold to satisfy the mortgage debt. The foreclosure procedure varies from province to province.


Full Disclosure
The obligation to reveal all material facts. Under law, a real estate broker is required to fully disclose, all facts to a third party.


G

Good Faith
An act done in honesty.


Goodwill
A business asset of intangible value created by customer and supplier relationships


Gross domestic product
The value of all the final goods and services produced in Canada during a particular period of time.


Gross Income
Total income from a property before any expenses are deducted.


Guarantee
A promise by one party to pay a debt or perform an obligation contracted by another, if the original party fails to pay or perform according to the contract.


H

Habitable
Suitable for occupancy. Before a new structure can be occupied, the Builder must obtain an Occupancy Certificate.


Hazard Insurance
A form of insurance in which the insurance company protects the insured from specified losses, such as fire, storms, etc.


Home Owner's Insurance
A package insurance policy available to either Condominium, or Single Home owners. Numerous types of policies are available. The home-owner can buy a standard fire insurance which insures only against fire and lightning, whereas for an additional premium, coverage can broaden to include damage from wind, hail, smoke, explosion, riots, robbery etc. A home-owner's policy can be purchased by any person occupying the home.


House Price Index
Quarterly measure of the change in single family home prices. It measures the average price change. Canada Mortgage & Housing Corporation is a good source for information of data from across the country.


Housing Starts
Data provided by the provinces, showing value in dollars and the number of building permits that were issued for new homes and renovations.


Housing expenses to income ratio
This ratio is expressed as a percentage, which results when a borrowers housing expenses are divided by his/her gross monthly income. (See Debt to Income Ratio)


I

Index
A published interest rate used to adjust the interest rate on an adjustable mortgage up or down.


Interest
The amount that is added to your loan to cover the cost of borrowing money to finance your home. The interest payment is the portion of your monthly payment that is applied against the interest owed. In the beginning of the loan period, the majority of your monthly payment is applied against the interest. Over time, a larger percentage of the payment will be applied directly against the principal owed.


Interest Rate
The cost of borrowing expressed as annual percentage of the principal.


L

Legal Description
A legally acceptable identification of real estate recorded by Lot, Block, Plan #, etc.


Lien
A legal claim against a price of property for the payment of a debt or obligation.


Lien holder
One who holds a Lien or benefits from a Lien.


Loan to Value Ratio
The ratio of the amount of money owed on a property to the fair market value. The difference between the value and the mortgage loan is the down payment.


Lock in interest rate
The lender guarantees that the mortgage rate will remain the same for a specific time period.


Loan application:
A document required by a lender prior to issuing a loan commitment. The application generally has the following information: name of borrower, amount & terms of the loan, description of the property to be mortgaged and the borrower's financial and employment information.


M

Market Value
The highest price a purchaser would pay and the lowest price a seller would accept. Market value can be different from the price a property could actually be sold at any given time.


Maturity
A date when a mortgage or loan is due and payable.


Mean Home Price
(new or existing homes sold)
The mathematical average price of all homes sold in a particular time-period. The mean price usually is higher than the median price due to a larger number of high-priced homes sold. The real estate boards in each province and Canada Mortgage & Housing Corp. provides quarterly figures.


Misrepresentation
An innocent or negligent misstatement of fact detrimentally to another party. If a person makes a misrepresentation and later realizes his/her error, it is his/her duty to inform the other party involved, who is relying on the proper and correct information.


Mortgage Insurance
Money paid to insure the mortgage when the down payment is less than 25%. (See Canada Mortgage & Housing Corporation)


Mortgagee
The mortgage company or lender.


Mortgagor
The borrower or homeowner.


Mortgage Broker
The person who brings together a user of capital and a lender of capital, for a fee.


N

Net effective income
The borrowers gross income minus all payments on current loans.


Net Income
In accounting, this is the amount remaining after all expenses have been deducted.


New Home Sales
The Federal & Provincial governments survey all builders nationwide and base their figures on all building permits issued to determine the amount of new homes sold. This usually reflects any changes in Canada's economic environment.


No money down
This is a general term referring to a buyer purchasing real estate without using his/her funds. The entire mount of the purchase price is finalized by a mortgage loan.


Notarize
To attest in one's capacity as a Notary Public, to the authenticity of the signature/s.


Note
A written statement that acknowledges a debt and a promise to pay.


O

Occupancy:
The physical possession and utilization of a residence.


Offer
An offer is an interest by one party to form a contract with another party. For a contract to be binding and effective, it must have the following elements:

  • It must de definite and certain in terms.
  • It must include an identification of all parties to the contract.
  • A legal description of the property.
  • A time-period for any performance and the purchase price of the property.
  • The offer must be communicated in writing, with consideration, and be accepted by the seller.



Outstanding Balance
The remaining balance owed on a debt such as a mortgage.


P

Payment Penalty
Fees paid to the mortgage lender for pre-paying the mortgage loan.


Penalty
The money one will pay for breaking a law or violating part or all of the terms and conditions of a contract.


Power of Attorney
A legal document authorizing one person to act on behalf of another.


Prepaid Expenses
To adjust expenses held in trust by the lawyers or mortgage company. This can include items such as taxes, condo. fees and other special assessments.


Prepayment
A clause in a mortgage document authorizing the borrower to pay in advance - before the due date.


Prepayment Penalty
(See Payment Penalty)


Prime Rate
The lowest commercial interest rate charged by banks on short term loans offered to their preferred customers.


Principal
The person who owns or will use the property.


Principal & Interest Payment
A payment usually paid either monthly or bi-weekly that includes the interest charges for the mortgage amount applied to the amortization of the principal balance.


Principal
The amount of the loan in dollars - excluding any interest.


Principal Residence
The place one lives in most of the time.


Principal Interest & Taxes
(P.I.T.) The payments made against the principal of the amortized mortgage loan which includes the interest and a contribution towards a portion of the taxes. Payable mostly on a monthly or bi-weekly basis.


Promissory Note
A written promise to pay a specified sum to a specified person under specified terms.


Property
The right of ownership in land or goods to the exclusion of all others.


Property Tax
Based on market value, the government will levy tax on privately owned property.


Pro rate
To allocate between seller and buyer their proportionate share of an obligation (i.e. taxes)


Q

Qualified Buyer
A person who has satisfied the mortgage lender that he/she is financially able to qualify for a loan.


Quit Claim Deed
A Deed useful in clearing disputes such as dower rights or liens. A person giving a Quit Claim Deed releases all present rights and interest in the property conveyed.


R

Rate of Interest:
Same as interest rate.


Refinance
Obtaining a new mortgage loan on a property already owned and already financed. This is done to replace an existing mortgage on the property.


S

Sales Contract
An agreement by which the buyer and the seller agree to the terms and conditions of the sale.


Sales Price
The price agreed by the seller and the purchaser for the purchase of a property.


Sales Person
A sales agent. The sales person is normally licensed by the provincial government under the Real Estate Act to perform on behalf of any licensed broker.


Satisfaction of mortgage
A document issued by the lender to the borrower when he/she discharges (pays off) the mortgage loan.


Second Mortgage
A mortgage made subsequent to the first mortgage and is subordinate to the first mortgage placed.


Simple Interest
Interest calculated only on the principal balance.


Sweat Equity
Equity created by a purchaser performing work on a property being purchased.


T

Tax
A charge levied upon persons or things by the government.


Title
A document available from the land title's office that shows an individual's ownership of a piece of property.


Title Search
An examination of municipal/county records to determine legal ownership of property.


U

Underwriting
The decision to make a loan to a potential home buyer based on credit, employment, assets and other factors. The mortgage rate is determined by these factors.


Usury
Rate of interest charged in excess of the legal rate established by law.


V

Variable-Rate-Mortgage
Another term for an adjustable rate mortgage.


Y

Yield
The interest earned (or return) by an investor on an investment, stated as a percentage of the amount that was invested.