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Important Words to Know

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Amortization. Length of time over which the debt will be repaid.

Appraisal. Process for estimating the market value of a property.

Approved Lender. A lending institution designated as an approved lender by CMHC under the National Housing Act. Only approved Lenders may qualify for CMHC Loan Insurance.

Closing Costs. Costs in addition to the purchase price of the home, such as legal fees, transfer fees and disbursements, that are payable on closing day. They range from 1.5% to 4% of a home’s selling price.

Closing Day. Date on which the sale of the property becomes final and the new owner takes title to the home.

Conditional Offer. An Offer to Purchase that is subject to specified conditions, for example, the arrangement of a mortgage. There is usually a stipulated time limit within which the specified conditions must be met.

Counteroffer. If, for example, your original offer to the vendor is not accepted, the vendor may counteroffer. This means that the vendor has amended something from your original offer, such as the price or closing date. As this new offer varies the terms of the original offer, this rejects the original offer. If a counteroffer is presented, the individual has a specified amount of time to accept or reject.

Deed. A legal document that transfers ownership on the real property to the purchaser. This is often called a “Transfer”. The document is registered as evidence of ownership.

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.

Freehold. A freehold title is an interest in land that gives the holder full and exclusive ownership of the land and building for an indefinite period. A leasehold title is an interest in land that gives the holder the right to use and occupy the land and building for a definite period.

Home Inspector. A person who visually inspects a home to tell you if something is not working properly, or is unsafe. He or she will also tell you if repairs are needed, and maybe even where there were problems in the past.

Land Registration. A system to record interests in land, including the ownership and disposition of land.

Land Surveyor. A professional who can survey a property in order to provide a certificate of location.

Lawyer. A legal advisor who is licensed to practice law and who assists people by representing them on legal matters.

Mortgage. A mortgage is a security interest given in the property you are purchasing which secures repayment of the loan related to the property. That security interest is discharger on payment of the principal and interest owning on the loan in accordance with the mortgage document. In Quebec, “mortgages” are called “hypothèques”.

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.

Mortgage Broker. The job of the mortgage broker is to find you a lender with the terms and raters that will best suit you.

Mortgage Lender.  A mortgage lender is an institution (bank, trust company, credit union, etc.) that lends money for a mortgage.

Mortgage Loan Insurance. Mortgage loan insurance is required for residential mortgage loans with a loan-to-value ratio of more than 80%, and is available from CMHC or a private company. Because mortgage loan insurance protects the lender against losses in the event that a borrower fails to pay his or her mortgage, it enables more Canadians to purchase their home earlier, at competitive interest rates and benefit from the growth in home equity sooner.

MLS — Multiple Listing Service. A multiple listing service that contains descriptions of most of the homes that are for sale. This computer-based service is used to keep up with properties that are listed for sale.

Offer to Purchase. A written contract setting out the terms under which the buyer agrees to buy the home. If the Offer to Purchase is accepted by the seller, it forms a legally binding contract that binds the people who signed to certain terms and conditions.

Open-house.  A period of time during which a house or apartment for sale or rent is held open for public viewing.

Operating Costs. The expenses that a homeowner has each month to operate a home. These include property taxes, property insurance, utilities, telephone and communication charges, maintenance and repairs.

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 property.

Property Taxes. Taxes charged by the municipality where the home is located usually based on the value of the home. In some cases the lender will collect a monthly amount as part of the mortgage payment to cover your property taxes, which is then paid by the lender to the municipality on your behalf.

Realtor or Real Estate Agent. A person who acts as an intermediary between the seller and the buyer or a property.

Survey or Certificate of Location. A document that shows property boundaries and measurement specifies the location of buildings, fences, and other improvements on the property and states easements or encroachments, at a specific point in time.

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