Glossary of real estate terms

The world of real estate has it's own set of terms, some easily understandable, and some that could be from a completely alien language for all the sense that they make to people purchasing their first piece of real estate, or people who live outside Canada looking to venture into the vacation property market, or relocate permanently.

We have assembled a list of the most popular terms, however it's by no means exhaustive, and you will almost certainly come up against other terms not on this list but equally as important to understand.

Amortization period:
The actual number of years that it will take to pay back your mortgage.
Appraised value:
Estimate of the property's value for the purpose of gaining a mortgage, carried out by a certified appraiser.
Assumability:
Allows the buyer to take over the seller's mortgage on the property when it changes ownership.
Closed mortgage:
This is a mortgage that locks you into a specific payment schedule, and does not usually allow repayment in full of the loan until the end of the closed term without penalties being applied.
Conditional offer to purchase:
Means that one or more conditions have been placed on the purchase for example, subject to home inspection, subject to sale of buyer's existing home, etc. The home is not sold until all the conditions have been met.
Condominiums:
You own, and are responsible, for the interior of your unit. Upkeep of the building and grounds is carried out by the condominium association, and is funded by the monthly condominium fees you pay.
Condominium fee:
A payment, usually monthly, that every owner makes. This fee is used to cover expenses such as shared facilities, some utilities, gardening and building upkeep services etc.
Conventional mortgage:
A mortgage loan issued against the property's appraised value or purchase price, whichever is the less, and not exceeding 75% of the purchase price.
Cooperatives:
Similar to condominiums except instead of owning your unit you own a percentage of shares in the entire building.
Deed tax:
Fee paid to the municipal and/or provincial government when transferring ownership of property from seller to buyer. Also known as land transfer tax or property purchase tax.
Down payment:
Buyer's cash payment made that makes up the difference between the purchase price and the value of the mortgage loan.
Equity:
The difference between what you owe and what you own in relation to the value of the property.
Freehold:
You own the structure and the grounds in a freehold home.
Firm offer to purchase:
Preferred by the seller because ti means that you are prepared to purchase the property without and conditions, if the seller accepts the offer the home is yours.
Good title:
Means title appropriate for the buyer's purposes. Buyers want "good and marketable" title to a property.
High-ratio mortgage:
Mortage loan exceeding 75% of the property's appraised value. Mortgage payment insurance is also required.
Interest rate:
The rate charged by a lender for a loan or mortgage. Rate is usually expressed as a percentage.
Land transfer tax:
Fee paid to the municipal and/or provincial government when transferring ownership of property from seller to buyer. Also known as deed tax or property purchase tax.
Marketable title:
Means title the buyer can convey to someone else. Buyers want "good and marketable" title to a property.
Maturity date:
The date at which the term of the loan comes to an end.
Mortgage lender:
The financial institution or person that lends money for mortgages.
Mortgage insurance:
Protects the mortgage lender against loss if the borrower is unable to repay the mortgage in high-ratio mortgages.
Mortgage life insurance:
Pays off the mortgage if the borrower dies.
Mortgagor:
The mortage borrower.
Offer to purchase:
Legal document that specifies the terms & conditions of your purchase offer, can be firm or conditional. In the province of Quebec,this is referred to as a "Promise to Purchase."
Open mortgage:
Allows penalty free repayment of partial or the full mortgage at any time.
Property purchase tax:
Fee paid to the municipal and/or provincial government when transferring ownership of property from seller to buyer. Also known as deed tax or land transfer tax.
Portability:
A mortgage option that allows a borrower to take their current mortgage with them to another property without penalties.
Pre-approved mortgage:
Mortgage qualification before you find a property to purchase, meaning that the exact mortgage amount available is known and approved up front making it quicker to make a firm offer on a property.
Prepayment privileges:
Voluntary payments that are made in addition to regular mortgage payments.
Principal:
Amount borrowed or still owing on a mortgage loan and on which interest is paid.
Real property report:
Shows the location of the house on the property owned by the seller and that there are no encroachments.
Refinancing:
Paying off the existing mortgage by arranging a new one, or renegotiating the terms & conditions of the existing mortgage loan.
Renewal:
Renegotiation of a mortgage loan at the end of the existing term for a new term.
Second mortgage:
Additional mortgage loan on top of any existing mortgage, usually has higher interest rate and shorter term than first mortgage on property.
Term:
Indicates when the pricipal balance becomes due to the mortgage lender on a mortgage loan.
Title:
Legal ownership of a property. Certificate of Title is issued on completion of purchase process. Buyers want "good and marketable" title to a property.
Title to property:
The legal tern for ownership of property. Certificate of Title is issued on completion of purchase process. Buyers want "good and marketable" title to a property.
Variable rate mortgage:
Payments fluctuate with interest rate changes.
Vendor take-back mortgage:
When the seller provides some or all of the mortgage financing in order to sell their property.