ADJUSTABLE MORTGAGE INTEREST RATE: With an adjustable, both the interest rate and the mortgage payment vary, based on market condition.
AMORTIZATION: Lenght of time over which the debt will be repaid.
APPRAISAL: Process for estimating the market value of a property.
APPRECIATION: The increase in value of something because it is worth more now than when you bought it.
APPROVED LENDER: A lending institution authorized by the Government of Canada through the CMHC to make loans under the terms of the National Housing Act. Only Approved Lenders can negotiate CMHC insured mortgages.
ASSUMPTION AGREEMENT: A legal document signed by a homebuyer that requires the buyer to assume responsibillity for the obligations of a mortgage by the builder or the previous owner.
BLENDED PAYMENT: A mortgage payment that includes principal and 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.
BUILDER: A person or company that builds homes.
CARRIAGE HOME: A carriage, or link home, is joined by a garage or carport. The garage or carport gives access to the front and back yards. Builders sometimes join basement walls so that link houses appear to be single-family homes on small lots. These houses can be less expensive than single-family homes.
CERTIFICATE OF LOCATION: Also called an Estoppel Certificate, it is a certificate that outlines a condominium corporation's financial and legal state. Fees vary and may be capped by law.
CLOSED MORTGAGE: A closed mortgage cannot be paid off, in whole or in part, before the end of its term. Many closed mortgages limit prepayment options such as increasing your mortgage payment or lump sum prepayment[usually up to 20% of your original principal amount].
CLOSING COST: Cost in addition to the purchase price of the home, such as legal fees, transfer fees and disbursements, that are payable on closing day. The range from 1.5% to 4% of the home's selling price.
CLOSING DAY: Date on which the sale of the property becomes final and the new owner takes possession of the home.
CMHC INSURANCE PREMIUMS: The CMHC Mortgage Loan Insurance premium is calculated as a percentage of the loan and is based on the size of your down payment. The higher the percentage of the total house price/value that you borrow, the higher percentage you will pay in insurance premiums.
COMMITMENT LETTER[OR 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.
COMPOUND INTEREST: Interest calculated on both the principal and the accrued interest.
CONDITIONAL OFFER: An Offer to Purchase that is subject to specified conditions, for example, the arrangement of mortgage. There is usually a stipulated time limit within which the specified conditions must be met.
CONDOMINIUM[OR STRATA]: A unit, usually in a highrise or low-rise, or a townhouse that can be owned. You own the unit you live in and share ownership rights for the common space of the building. Common space includes areas such as corridors, the grounds around the building, and facililties such as a swimming pool and recreation rooms. Condominium owners together control the common areas through an owners' association. The association makes decisions about using and maintaining the common space.
CONTRACTOR: A person responsible for overall construction of a home, including buying, scheduling, workmanship and management of subcontractors and suppliers.
CONVENTIONAL MORTGAGE: A mortgage loan up to a maximum of 80% of the lending value of the property. Typically, the lending value is the lesser of the purchase price and market value of the property. Mortgage insurance is usually not required for this type of mortgage.
COUNTEROFFER: If your original offer to the vendor is not accepted, the vendor may counter-offer. This means that the vendor has amended something from your original offer, such as the price or closing date. If a counter-offer is presented, the individual has a specified amount of time to accept or reject.
CREDIT BUREAU: A company that collects information from various sources and provides credit information on a person's borrowing and bill paying habits to help lenders assess whether or not to lend money to the person.
CREDIT HISTORY OR CREDIT REPORT: The main report a lender uses to determine your credit worthiness. It includes information about your ability to handle your debt obligations and your current outstanding obligations.
CURB APPEAL: How attractive the home looks from the street. A home with good curb appeal will have attractive landscaping and a well maintained exterior.
DEFAULT ON PAYMENT: Failure to make a mortgage payment.
DEPOSIT: Money placed in trust by the purchaser when an Offer to Purchase is made. The sum is held by the real estate representative or lawyer/notary until the sale is closed and then it is paid to the vendor.