| Amortization: |
Paying
off a debt, such as a mortgage, by installments. The
conventional amortization period for a mortgage is anywhere
between 15 and 25 years. The shorter the amortization
period, the less interest you have to pay. |
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| Appraisal:
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An
estimate of a property's value. |
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| Asking
(list) price: |
The
price placed on the property for sale by the seller.
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| Blended
payments: |
Payments
consisting of principal and interest components, paid
during the amortization period of a mortgage. |
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| Broker: |
A
person licensed by the provincial or territorial government
to trade in real estate. Real estate brokers may form
companies or offices which appoint sales representatives
to provide services to the seller or buyer, or they
may provide the same services themselves. In parts of
Canada, brokers are referred to as agents. |
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| Buyer's
Agent (also known as "Buyer's Broker" or "Purchaser's
Agent"): |
A
person or firm representing the buyer. A Buyer's Agent's
primary allegiance is to the buyer. The buyer is the
Buyer Agent's client. |
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| Buyer
Brokerage Agreement: |
A
written agreement between the buyer and the buyer's
agent, outlining the agency relationship between the
two parties and the manner in which the buyer's agent
will be compensated. In some provinces, a buyer agency
relationship arises automatically, without a written
agreement establishing the relationship. |
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| Client:
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The
person being represented by an agent. The agent owes
the client the duties of utmost care, integrity, confidentiality
and loyalty. |
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| Closing: |
The
day the legal title to the property changes hands. |
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| CMHC:
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Canada
Mortgage and Housing Corporation. A Crown corporation
providing information services and mortgage loan insurance. |
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| Commission:
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An
amount agreed to by the seller and the real estate broker/agent
and stated in the listing agreement. It is payable to
the broker/agent on closing and shared, if applicable,
among those salespeople involved in the sale. |
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| CREA: |
The
Canadian Real Estate Association. A national association
representing the real estate industry on federal public
policy matters, providing member services and education.
CREA promotes adherence to a strict Code of Ethics and
Standards of Business Practice. |
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| Customer:
|
A
person who receives valuable information and assistance
from a real estate broker or salesperson, but is not
represented by that individual. |
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| Debt-Service
Ratio: |
The
measurement of debt payments to gross household income
which may include, in addition to the main wage earner's
salary, salaries of other wage earners, commissions,
bonuses, overtime, etc. |
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| 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. |
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| Equity: |
The
difference between the value of the property and the
amount owing (if any) on the mortgage. |
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| Financial
Institutions: |
Banks,
credit unions, insurance or trust companies. |
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| GE
Capital Mortgage Insurance Company: |
GE
Capital Mortgage Insurance Company is the only private
sector source of mortgage insurance to lenders in Canada.
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| Gross
Debt Service: |
The
amount of money needed to pay principal, interest, taxes
and sometimes, energy costs. If the dwelling unit is
a condominium, all or a portion of common fees are included,
depending on what expenses are covered. |
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| Gross
Debt Service Ratio: |
Gross
debt service divided by household income. A rule of
thumb is that GDS should not exceed 30%. It is also
referred to as PIT (Principal, Interest and Taxes) over
income. Sometimes energy costs are added to the formula,
producing PITE, which moves the rule of thumb GDS to
32%. |
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| Listing
Agreement: |
The
legal agreement between the listing broker and the seller,
setting out the services to be rendered, describing
the property for sale and stating the terms of payment.
A commission is generally payable to the broker upon
closing. |
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| MLS®,
Multiple Listing Service®: |
Trademarks
owned by The Canadian Real Estate Association. They
are used in conjunction with a real estate database
service, operated by local real estate boards, under
which properties may be listed, purchased or sold. |
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MLS®
Online™: |
Carries
MLS® property advertisements and consumer-related information
supplied by individual real estate boards and associations
across Canada. |
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| Mortgage:
|
A
contract providing security for the repayment of a loan,
registered against the property, with stated rights
and remedies in the event of default. Lenders consider
both the property (security) and the financial worth
of the borrower (covenant) in deciding on a mortgage
loan. |
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| Mortgage
Broker: |
A
person or company having contacts with financial institutions
or individuals wishing to invest in mortgages. The mortgagor
pays the broker a fee for arranging the mortgage. Appraisal
and legal services may or may not be included in the
fee. |
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| Mortgage
Insurer: |
in
Canada, high-ratio mortgages (those representing greater
than 75% of the property value) must be insured against
default by either CMHC or private insurers. The borrower
must arrange and pay for the insurance, which protects
the lender against default. |
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| Mortgagee: |
The
person or financial institution lending the money, secured
by a mortgage. |
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| Mortgagor:
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The
property owner borrowing the money, secured by a mortgage.
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| Offer
of Purchase and Sale: |
The
document through which the prospective buyer sets out
the price and conditions under which he or she will
buy the property. |
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| Real
Estate Board: |
A
non-profit organization representing local real estate
brokers/agents, salespeople, which provides services
to its members and maintains and operates a MLS® system
in the community. |
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| REALTOR: |
Trademark
identifying real estate professionals in Canada who
are members of The Canadian Real Estate Association,
and as such, subscribe to a high standard of professional
service and to a strict Code of Ethics. |
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| Term:
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The
actual life of a mortgage contract-- from six months
to ten years -- at the end of which the mortgage becomes
due and payable unless the lender renews the mortgage
for another term (See Amortization).
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| Seller's
Agent: |
The
Seller's Agent represents the seller -- either as a
Listing Agent under the listing agreement with the seller
or by cooperating as a Sub-Agent, typically through
the MLS® system. In dealing with prospective buyers
-- customers-- the Seller's Agent can provide a variety
of information and services to assist the buyer in his/her
decision-making. The Seller's Agent does not represent
the buyer. |
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| 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 the
interest; if rates go down, more goes to cover the
principal.
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