AMORTIZATION
The period of time required to reduce the mortgage debt to zero when all regular blended payments are made on time and provided the terms (payment and interest rate) remain the same.

APPRAISAL
A process for estimating the market value of a particular property.

APPRECIATION
The increase in value of something because it is worth more now than when you bought it.

ASSESSMENT
The value of a property set by provincial assessors, for the purposes of calculating property tax.

ASSUMABLE MORTGAGE
A mortgage that can be transferred to a new owner. The new owner then assumes responsibility as the guarantor for the unpaid balance of the mortgage.

ASSUMPTION AGREEMENT
A legal document signed by a homebuyer that requires the buyer to assume responsibility for the obligations of a mortgage by the builder or the previous owner.

BLENDED PAYMENT
A mortgage payment that includes principal in interest. It is paid regularly during the term of the mortgage. The payment total remains the same, although the principal portion increases over time and the interest portion decreases.

BRIDGE FINANCING
Interim financing to bridge between the closing date on the purchase of the new home and the closing date of the current home, which is sold firm.

CHATTEL
Removable personal items that are not normally included in the sale of a home, but may be added to the purchase price to make the property more attractive to buyers. (Examples include microwave ovens, portable dishwashers, washers and dryers.)

CLOSED MORTGAGE
A mortgage that cannot be prepaid or renegotiated before the term’s end unless the lender agrees and the borrower is willing to pay in interest penalty. Many closed mortgages limit prepayment options such as increasing your mortgage payment or lump sum prepayment.

CLOSING COSTS
Costs in addition to the purchase price of the home, such as legal fees, transfer fees and disbursements, that are payable on the closing day.

CLOSING DATE
The date at which the sale of a property becomes final and the new owner takes possession.

COMMITMENT LETTER/MORTGAGE APPROVAL
Written notification from the mortgage lender to the borrower that approves the advancement of a specified amount of mortgage funds under specified conditions.

COMMON ELEMENTS
The portions of a condominium development owned in common (shared) by the unit owners.

CONDITIONAL OFFER
An Agreement of Purchase and Sale that is subject to specified time conditions, for example, the arrangement of a mortgage or satisfactory inspection. The specified conditions must be met for the transaction to move forward.

CONDOMINIUM
Shared ownership in property. Owners have title (ownership) to individual units and a proportionate share in the common elements.

CONDOMINIUM FEES
These monthly fees vary for each condominium. The fees are applied to everything from landscaping and carpet cleaning to security personnel.

COUNTER-OFFER
If your original offer to the vendor is not accepted, the vendor may send a counter-offer which means that the vendor has made a change to your original offer, such as the price or closing date. If a counteroffer is presented, the individual has a specified amount of time to accept or reject it. If accepted, then it is binding. If rejected, then there is no offer in place.

CREDIT REPORT
The main report a lender uses to determine your creditworthiness. It includes information about your ability to handle your debt obligations and your current outstanding obligations.

DEED
A legal document that is signed by both the vendor and purchaser, transferring ownership. This document is registered as evidence of ownership.

DEFAULT
Failure to abide by the terms of the mortgage agreement such as failure to make mortgage payments may allow the mortgage holder to take legal action to repossess (foreclose) the property.

DEPOSIT
Funds placed in a trust account by the purchaser when an Offer to Purchase is made. The real estate representative or lawyer/notary holds the sum until the sale is closed and then it is paid to the vendor.

DEPRECIATION
The decrease in value of something because it is now worth less than when you bought it.

DISCHARGE
The removal of all mortgages and financial encumbrances on the property.

DOWN PAYMENT
The portion of the home price that is not financed by the mortgage loan. The buyer must pay the down payment from his/her own funds or other eligible sources before securing a mortgage. It generally ranges from 5% to 25% of the purchase price but can be more.

DUAL AGENT
A real estate Broker or salesperson who acts as agent for both the seller and the buyer in the same transaction. Both buyer and seller are the agent’s clients.

EASEMENT
This is where someone else has the right for access to or over another person’s land for a specific purpose, such as a driveway or public utilities.

ENCROACHMENT
An intrusion onto an adjoining property. A neighbor’s fence for example that partially or fully intrudes onto your property are examples of encroachments.

ENCUMBRANCE
A registered claim for debt against a property, such as a mortgage or a lien.

EQUITY
The difference between the value of the property and the amount owing (if any) on the mortgage.

FIRST MORTGAGE
The first security registered on a property. Additional mortgages secured against the property are “secondary” to the first mortgage.

FIXTURES
Permanent improvements to a property that are normally included with the purchase unless specifically excluded in the Agreement of Purchase and Sale. Examples include wall-to-wall carpeting and built-in appliances.

FORECLOSURE
The legal process where the lender takes possession of your property and sells it to cover the debts you have failed to pay off. When you default on a loan and the lender feels that you are unable to make payments, you may lose your home to foreclosure.

INTEREST
The cost of borrowing money. Interest is usually paid to the lender in regular payments along with repayment of the principal.

JOINT TENANCY
The ownership of property by two or more persons on title, and upon the death of one, the survivor(s) retain ownership.

LAWYER FEES
Each real estate transaction requires the assistance of a legal professional to review the Offer to Purchase, search the title, draw up the mortgage documents and take care of the details on the day of closing. Lawyers’ fees range widely depending on the complexity of the transaction.

LIEN
A claim against a property for money owing. A supplier or a subcontractor who has provided labour or materials but has not been paid may file a lien.

MATURITY DATE
The last day of the term of the mortgage. On this day, the mortgage loan must either be paid in full or the agreement renewed.

MAINTENANCE FEE
A monthly fee paid by condominium owners for maintaining the development’s common areas.

MORTGAGE
A mortgage is a security for a loan on the property you own.

MORGAGEE
The person or financial institution lending the money, secured by a mortgage.

MORTGAGOR
The property owner borrowing the money, secured by a mortgage

NET WORTH
Your financial worth, calculated by subtracting your total liabilities from your total assets.

OFFER TO PURCHASE
A written contract setting out the terms under which the buyer agrees to buy the home. If the seller accepts the Offer to Purchase, it forms a legally binding contract that binds those who have signed it to certain terms and conditions.

POWER OF SALE
Should default occur it is the right of the mortgagee to force the sale of the property without judicial proceedings.

PRINCIPAL
The amount that you borrow for a loan. Each monthly mortgage payment consists of a portion of the principal that must be repaid plus the interest that the lender is charging you on the outstanding loan balance. During the early years of your mortgage, the interest portion is usually larger than the principal portion.

PROPERTY INSURANCE
Insurance that you buy for the building(s) on the land you own. This insurance should be high enough to pay for the building to be re-built if it is destroyed by fire or other hazards listed in the policy.

PROPERTY TAXES
Taxes charged by the municipality where the home is located based on the value of home.

REFINANCE
To pay off a mortgage or other registered encumbrance and arrange a mortgage, sometimes with a different lender.

SECOND MORTGAGE
An additional loan on a property that becomes second in position behind the first mortgage. Generally at a higher interest rate and shorter terms than a first mortgage.

STATEMENT OF ADJUSTMENT
A balance sheet statement that indicates credits to the vendor for the purchase price – and any prepaid taxes and credits to the buyer’s deposit, and the balance due on closing.

STATUS CERTIFICATE
Is a certificate that outlines a condominium corporation’s financial and legal status.

SURVEY
A professionally prepared document that provides accurate details about a property’s location, boundaries, size and legal description, as well as any improvements to the property including buildings, fences, etc.

TENANCY IN COMMON
The ownership of property by one or more people, which is not passed on as a right of survivorship, but rather is an asset and can be willed.

TITLE
A freehold title gives the holder full and exclusive ownership of the land and building for an indefinite period. A leasehold title gives the holder the right to use and occupy the land and building for a defined period.

TITLE SEARCH
A detailed examination of the ownership documents to ensure that there are no liens or other encumbrances on the property.

VARIABLE-RATE MORTGAGE
A mortgage in which payments are fixed, but the interest rate moves in response to trends. If interest rates go up, a larger portion of your payment goes to interest; if the rates go down, more goes to cover the principal.

VENDOR TAKE BACK MORTGAGE
This is where the vendor rather than a financial institution finances the mortgage. The title of the property is transferred to the buyer who makes mortgage payments directly to the seller. These types of mortgages, sometimes referred to as take-back mortgages, can be helpful if you need a second mortgage to buy a home.

ZONING LAWS
Municipal laws restricting the use of land for specific purposes.