A

Agreement of Purchase and Sale
A contract by which one party agrees to sell and another agrees to purchase.
Amortization
Period of time required to reduce debt to zero when payments are made regularly
Appraisal
Process by which the mortgage lending value of a property is determined

B

Bridge Financing
Interim financing to bridge between the closing date on the purchase of a new home and the closing date on the sale of the current home.
Broker
An intermediary between the buyer and seller who is licensed to carry out such activities.
Building Permit
A certificate that must be obtained from the municipality by the property owner or contractor before a building can be erected or renovated.

C

Closing Date
The date of which the sale of the property becomes final and the new owner takes possession.
Collateral Charge
Unlike a standard mortgage, a collateral charge is readvanceable — that means the lender can lend you more money after closing without you needing to refinance and pay a lawyer. The downside of a collateral charge is that it is non-transferable — It cannot be assigned (switched) to a new lender like a regular mortgage.
Commitment
A notice from a mortgage lender to a prospective borrower that the lender will advance mortgage funds of a specified amount under certain conditions.
Condition
condition in a contract that calls for the happening of some event or performance of some act before the agreement becomes binding.
Conditional Offer
An offer to purchase subject to specified conditions. These conditions could be the arranging of a mortgage, or the selling of a present home. Usually a time limit in which the specified conditions must be met is stipulated.
Conventional Mortgage
A mortgage loan of up to a maximum of 80% of the lending value of the property for which a lender does not require loan insurance.

D

Debt Service Ratio
The percentage of the borrower’s income that will be used for monthly payments.
Default
Non-payment of instalments due under the terms of the mortgage.
Deposit
Payment of money or other valuables in consideration as a pledge for fulfillment of the contract.
Discharge
The removal of all mortgages and financial encumbrances on the property.

E

Easement
The right acquired for access to or over another person’s land for a specific purpose, such as for driveway or public utilities.

G

Gross Debt Service Ratio (GDS)
Allocate up to a maximum of 35% of your gross annual income towards the repayment of principal and interest towards your mortgage, property taxes, and heating expenses.

H

High Ratio Mortgage
Loan that exceeds 80% of the property lending value, and which is insured through a mortgage default insurance.
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. The amount of the holdback is generally equivalent to the estimated cost to complete construction.
Home Equity Line of Credit (HELOC)
ome equity lines of credit (HELOCs) are essentially revolving lines of credit secured against one's home. Or, to put it another way, a HELOC is a mortgage loan that lets the borrower take multiple advances of the loan proceeds at his or her own discretion, up to the lender's stipulated maximum loan-to-value. Borrowers only pay interest on the money they use.

M

Mortgage Insurance Premium
A premium that is added to the mortgage and paid by the borrower. The mortgage insurance insures the lender against loss in case of default on the part of the borrower.
Mortgage Life Insurance
A form of reducing term insurance available for all mortgagors. In the event of a death of the owner or one of the owners, the insurance pays the balance owing on the mortgage. The intent is to protect survivors from losing their home.
Mortgagee
The entity that lends the money.
Mortgagor
The entity that borrows the money.

O

Offer to Purchase
A written contract setting forth the terms under which a buyer agrees to purchase a property. Upon acceptance by the seller, it forms a contract, which will form the basis for the final document to be prepared by a lawyer or notary. It includes the legal and/or municipal description (this may consist of lot numbers as well as street address), purchase price, closing date, mortgage and terms of repayment, and list specific items included as part of the sale.

P

P.I.T.
Principal, interest and taxes due on a mortgage.
P & I
Principal and interest due on a mortgage.
Penalty
A sum of money paid to a lender for the privilege of prepaying a mortgage in part or in full.
Power of Sale
The right of a mortgagee to force the sale of the property without judicial proceedings should default occur.
Pre-payment Option
The right to prepay a specified amount of the principal balance. Penalty interest may be incurred on prepayment options.
Prepayment
Full or partial payment of all or part of the principal, separate from the regular payments called for under a mortgage agreement.
Principal
The amount owing to the lender at any time.

R

Rate (interest)
The return the lender receives for loaning you the money for the mortgage.
Real Estate
Includes real property, leasehold and business whether with or without premises, fixtures, stock in trade, good of chattels in connection with the operation of the business.
Rollover Mortgage
A mortgage loan where the interest rate is established for a specific term. At the end of this term, the mortgage is said to “roll-over” and the borrower and lender may agree to extend the loan. If satisfactory terms cannot be agreed upon, the lender is entitled to be repaid in full. In this case, the borrower may seek alternative financing.

S

Sales Representative
A licensed employee of a Real Estate Broker authorized to trade in real estate.
Survey
The accurate mathematical measurement of land and building there on.

T

Term
The actual length of time money is loaned at the contractual rate of interest. Terms range from three months to ten years. Traditionally the longer the term, the higher the rate
Total Debt Service Ratio (TDS)
Allocate up to a maximum of 42% of your gross annual salary for all credit payments - including mortgage, car loans, and credit card payments if applicable.
Term
The length of time that you pay a specific interest rate on your mortgage loan. At the end of the term you may repay the balance of the loan or re-negotiate at current rates and conditions.
Title
Evidence of ownership registered with the province.

V

Vendor
Seller of real property.
Vendor Take Back
Where the seller of a property provides some, or all of the mortgage financing in order to sell the property.

Z

Zoning Laws
Municipal laws restricting the use of land for special purposes.

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