| 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: |
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: |
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: |
Canada
Mortgage and Housing Corporation. A Crown corporation
providing information services and mortgage loan
insurance. |
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| Commission: |
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®:
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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: |
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: |
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. |
