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Glossary of Terms
When you decide to purchase a home in Ottawa, you will discover a new language used by real estate professionals. The following are some of the most common terms they use.
AMORTIZATION PERIOD: The Actual number of years it will take to pay back your mortgage loan.
APPRAISED VALUE: An estimate of the value of the property. Conducted for the purpose of mortgage lending by a certified appraiser. This appraisal is not to be confused with a building inspection.
ASSUMABILITY: Allows the buyer to take over the seller's mortgage on the property.
CHATTELS: Removable personal items that are not normally included in the sale of the home, but may be added to the purchase price to a make the property more attractive (i.e. microwave ovens, laundry appliances.)
CLOSED MORTGAGE: A mortgage that locks you into a specific payment schedule. A penalty usually applies if you repay the loan in full before the end of a closed term.
CONDOMINIUM: The owner has title to a single unit, as well as a share in the common elements such as elevators or surrounding land.
CONDOMINIUM FEE: A common payment among owners which is allocated to pay expenses.
CONVENTIONAL MORTGAGE: A mortgage loan issued for up to 75% of the property's appraised value or purchase price, whichever is less.
COUNTER-OFFER: One party's alteration of the terms of the other party's offer during negotiations of a real estate purchase between buyer and seller.
DOWN PAYMENT: The buyer's cash payment toward the property. The difference between the purchase price and the amount of the mortgage loan.
EASEMENT: A legal right to use or cross (right of way) another person's land for limited purposes. A common example is a utility company's right to run wires or lay pipes across a property.
ENCROACHMENT: An intrusion onto an adjoining property. A neighbour's fence, storage shed or overhanging roof line that partially (or fully) intrudes onto your property is an encroachment.
EQUITY: The difference between the home's selling value and the debts against it.
FIXTURES: Permanent improvements to a property that are normally included with purchase unless specifically excluded in an Agreement of Purchase and Sale. Wall-to-wall carpeting and installed appliances are often considered fixtures.
HIGH RATIO MORTGAGE: A mortgage that exceeds 75% of the home's appraised value. These mortgages must be insured for payment.
INSPECTION: The examination of the house for structural and other defects by an expert selected by the buyer.
INTEREST RATE: The value charged by the lender for the use of the lender's money. Expresses as a percentage.
LAND TRANSFER TAX, DEED TAX OR PROPERTY PURCHASE TAX: A fee paid to the municipal and/or provincial government for the transferring of property from seller to buyer.
LIEN: Any legal claim against a property, filed to ensure payment of a debt.
LISTING BROKER: The realtor who signs a contract with an owner to sell a property.
MATURITY DATE: The end of the term, at which time you can pay off the mortgage or renew it.
MORTGAGEE: The person or financial institution that lends the money.
MORTGAGOR: The borrower.
MORTGAGE INSURANCE: Applies to high-ratio mortgages. It protects the lender against loss if the borrower is unable to repay the mortgage.
MORTGAGE LIFE INSURANCE: Pays off the mortgage if the borrower dies.
OPEN MORTGAGE: Allows partial or full payment of the principal at any time, without penalty.
PORTABILITY: A mortgage option that enables borrowers to take their current mortgage with them to another property, without penalty.
PRE-APPROVED MORTGAGE: Qualifies you for a mortgage before you start shopping. You know exactly how much you can spend and are free to make a "firm" offer when you find the right home.
PREPAYMENT PRIVILEGES: Voluntary payments in addition to regular mortgage payments.
PRINCIPAL: The amount borrowed or still owing on a mortgage loan. Interest is paid on the principal amount.
REFINANCING: Paying off the existing mortgage and arranging a new one or re-negotiated the terms and conditions of an existing mortgage.
RENEWAL: Re-negotiation of a mortgage loan at the end of a term for a new term.
SECOND MORTGAGE: Additional financing. Usually has a shorter term and higher interest rate than the first mortgage.
SELLING BROKER: The Broker who actually finds the buyer.
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.
TERM: The length of time the interest rate is fixed. It also indicates when the principal balance becomes due and payable to the lender.
TITLE: Legal ownership in a property.
VARIABLE-RATE MORTGAGE: A mortgage with fixed payments, but fluctuates with interest rates. The changing interest rate determines how much of the payment goes towards the principal.
VENDOR TAKE-BACK MORTGAGE: When the seller provides some or all of the mortgage financing in order to sell their property.
ZONING REGULATIONS: Strict guidelines set and enforced by municipal governments regulating how a property may or may not be used.
