Amortization - The period of time required to reduce a debt to zero when payments are made regular
Appraisal - For mortgage lending purposes it is a process whereby the (lending) value of the property is determined. The lending value may or may not match the purchase price of the home. An appraisal done for mortgage lending purposes is carried out for the benefit of the lender or the mortgage insurer.
Bridge Financing - Interim financing to bridge the time gap between the closing date on the purchase of the new home and the closing date on the sale of the current home.
Building Permit - A certificate that must be obtained from the municipality by the property owner or contractor before a building can be erected or repaired. It must be posted in a conspicuous place until the job is completed and passed as satisfactory by a municipal building inspector.
Closing Date - In most cases, the date on which the sale of the property becomes final and the new owner takes possession.
Conventional Mortgage Loan - A mortgage loan up to a maximum of 75% of the lending value of the property for which a lender does not require mortgage loan insurance.
Default - Failure to abide by the terms of a mortgage loan agreement.
Easement - A right acquired for access to or over, and perhaps use of, another person's land for a specific purpose such as a driveway or public utilities.
Encumbrance - A register claim for debt against a property, such as a mortgage.
Equity (owner) - The difference between the price for which a home could be sold and the total debts registered against the home. Owner equity usually increases as the outstanding principal of the mortgage is reduced through regular payments. Market values and improvements to the property also affect equity.
Foreclosure - A legal procedure whereby the lender obtains ownership of the property following default by the borrower.
Gross Debt Service Ration (GDS) - The percentage of the borrower's gross income that will be used for monthly payments of principal, interest and taxes, heating costs and half of condominium fees.
Holdback - An amount of money withheld by the lender during the progress of construction of a house to ensure that construction is satisfactory at every stage.
Insured Mortgage Loan - A first mortgage loan, often for more than 75% of the value of the property, where the lender has the mortgage insured by either CMHC or a private mortgage insurance company. Mortgage loans of more than 75% of the value are also called high-ratio loans.
Mechanic's Lien - A claim against a property for money owing. A lien may be filed by a supplier or a subcontractor who has provided labor or materials but has not been paid. A lien must be properly filed by a claimant. It has a limited life, prescribed by statute that varies from province to province. If the lien-holder takes action within the prescribed time, the homeowner may be obliged to pay the amount claimed by the lien-holder.
Mortgage - A mortgage is security for a loan on the property that you own. It provides for your personal guarantee to repay the loan as well as a pledge of the property as security for the loan.
Offer To Purchase - A written contract setting out the terms under which the buyer agrees to buy. Upon acceptance by the seller, it forms a legally-binding contract subject to the terms and conditions stated in the document.
Option Agreement - A document stipulating that, in exchange for a deposit, a specified individual is to be given the first chance of buying a property at or within a specified period of time. If the option holder does not buy at or within the specified period, he or she loses the deposit and the agreement is canceled.
Principal - The amount of money actually borrowed.
Term - The length of time during which you pay a specific interest rate on your mortgage loan. You may not have paid off your entire mortgage principal at the end of a term because your amortization period will likely be longer than the term.
Title (Freehold or Leasehold) - A freehold title is evidence of ownership of land and buildings for an indefinite period of time. A leasehold title is evidence of a right to sue and occupy land and buildings for a defined period of time. In a leasehold arrangement actual ownership of the land (and perhaps buildings) remains with the landlord.
Total Debt Service Ration (TDS) - The percentage of gross annual income required to cover all payments for housing and all other debts such as car payments
Type Of House - These definitions apply to the different types of housing on the market
Single Family Detached: This is what most American's want. It is free standing on its own lot and is occupied by one family.
Semi-detached: One of two single-family houses joined by a common wall
Duplex:Two dwelling units, one above the other. Often the owner lives in one unit and rents the other.
Row or town house: One of several single-family homes joined by common walls.
Link or carriage homes: Row houses where homes are joined by garages or carports which provide access between the front and rear yards. Builders sometimes join basement walls so that, when see above ground, link houses look like singles on small lots.
High-rise buildings: Multistory residential buildings containing apartments for rent or condominium units
Mobile or manufactured housing: A factory-built, single family dwelling designed to be transported to its ultimate site. They come in single widths or multiple width which have to be joined on site.
A condominium is not a type of house. It is a type of ownership. Condominiums are most often in high-rise buildings or in row houses arrangements.
Vendor Take Back Mortgage - Mortgage financing arranged between the seller of the property and the buyer. The title is transferred to the buyer. Often this type of loan is a second mortgage which the seller is willing to arrange at below market rates to ensure the buyer can make the purchase of the house. Most of these arrangements are not renewable nor can they be transferred to the next owner of the house |