Adjustment Date
The day from which all calculations of interest, tax adjustments, utility bill adjustments (if applicable) are made to the credit of either the buyer or the seller. Normally, (but not always), the same date as possession date.
Amortization Period
The actual number of years it will take to pay your mortgage loan.
Amortization Schedule
A table showing the amount of principal and of interest in each periodic payment due at regular intervals and the outstanding principal balance of the loan after each periodic payment is made.
Amortized Mortgage
A mortgage that requires periodic payments which include both a partial repayment of the principal plus interest on the outstanding balance.
Appraised Value
An estimate of the market 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.
Assessed Value
BC Assessment sets property values which are used by local municipalities to calculate property tax.
Assumability
Allows the Buyer to take over [assume] the Seller's mortgage on the property.
Basis Point
Unit of measure that describes yield changes of less than one per cent in debt instruments such as mortgages. One basis point is equal to one-hundredth of one percent. (For example, a rate change of one percent equals 100 basis points).
Blanket Mortgage
A single mortgage registered against two or more individual parcels of real property.
Blended Mortgage Payment
An equal or regular mortgage payment, including both principal and interest components.
Blended Mortgage Rate
The combined rate of interest charged on the sum of an original and a subsequent mortgage which is derived from a formula that takes includes the interest rate on the existing loan plus the interest rate on the subsequent mortgage amount.
Buy-down
When the Seller reduces the interest rate on a mortgage by paying the difference between the reduced rate and the market rate directly to the lender or to the Buyer.
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 proportional share in the common elements such as elevators or surrounding land.
Condominium Fee
A common payment among owners which is allocated to pay common expenses.
Conventional Mortgage
A mortgage loan issued for up to 80% of the property's appraised value or purchase price, whichever is less.
Completion
The process of completing the real estate transaction, when the Seller and the Buyer agree that all legal and financial obligations have been met and title to the property is transferred from Seller to Buyer.
Conveyance
The process of transferring title From the Seller to the Buyer and includes all the necessary steps to complete the transfer. A conveyancing lawyer or notary is responsible for the conveyance process (normally the Buyer’s lawyer).
Counter offer
An offer made by the Seller back to the Buyer altering one or several terms and/or conditions of the offer as originally written.
Debt Service Ratio
The percentage of a borrower's income that can be used for housing costs. Gross Debt Service (GDS) Ratio is the amount that a lender will permit a borrower to use from his/her gross income in order to qualify for a loan for housing costs, including mortgage payment and taxes (and condominium fees, when applicable). Total Debt Service (TDS) Ratio is the maximum percentage of a borrower's income that a lender will consider for all debt repayment (other loans and credit cards, etc.) including a mortgage.
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 specific, limited purposes, e.g. a utility company's right to access pipes or cable, or to permit a driveway access to a neighbouring property.
Encroachment
An intrusion onto an adjoining property. Common examples are a neighbour's fence, storage shed, or overhanging roof line that partially (or even fully) intrudes onto your property.
Equity
The difference between the home's selling value and the debts against it. Equity is the owner's stake in the property
Foreclosure
A legal process by which the lender takes possession and ownership of a property when the borrower fails to meet mortgage obligations.
High-Ratio Mortgage
A mortgage that exceeds 80% of the home's appraised value. These mortgages must be insured for payment by Canadian Mortgage and Housing Corporation (CMHC) or a private insurer to protect the lender against default.
Interest Rate
The value charged by the lender for the use of the lender's money. Expressed as a percentage.
Lien
A legal claim against a property, filed to ensure payment of a debt, e.g. Builders Lien
Maturity Date
The end of the term, at which time you can pay off the mortgage or renew it.
Mortgage
A contract between a borrower and a lender. The borrower pledges a property as security to guarantee repayment of the mortgage debt.
Mortgagee
The Financial Institution or Lender that advances [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. Can be government-backed or private-backed
Mortgage Life Insurance
Pays off the mortgage in the event the borrower dies.
Mortgage Prepayment Penalty
A fee paid by the borrower to the lender in exchange for being permitted to break a contract (a mortgage agreement); usually three months' interest, but it can be higher or it can be the equivalent of the loss of interest to the lender.
Multiple Listing Service® (MLS®)
A current and comprehensive listing system for relaying property information to Greater Vancouver Real Estate Board Realtors. This service offers the widest exposure to properties listed for sale.
Open Mortgage: A mortgage that can be prepaid or renegotiated at any time and in any amount, 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 house-hunting. You know exactly how much you can spend and are free to make a "firm" offer when you find the right property. Lenders typically hold the quoted interest rate for a period of time offering protection against rising rates.
Prepayment Clause
A clause inserted in a mortgage, which gives the mortgagor the privilege of paying all or part of the mortgage debt in advance of the maturity date.
Prepayment Priveleges
Voluntary supplemental payments made in addition to regular mortgage payments that have the effect of shortening the amortization period and reducing the total cost of borrowing over time.
Principal
The amount borrowed or still owing on a mortgage loan. Interest is calculated and paid on the principal amount.
Property Disclosure Statement
This form enables Sellers to disclose known defects. If the seller decides not to complete the form and does not disclose known defects, he or she can still be held liable. The form also serves as a checklist for Buyers enabling them to address concerns about a property's condition.
Property Taxes
This levy is affected by location and the value of the property as determined by BC Assessment. The rate of taxation is determined by local government. Property taxes are paid on an annual basis.
Property Transfer Tax (PTT)
A fee paid to the BC Provincial government for the transferring of property from Seller to Buyer. The rate is one per cent on the first $200,000 of the fair market value plus two per cent on the remainder.
Refinancing
Paying off the existing mortgage and arranging a new one or re-negotiating 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.
Rights of Way
Are indicated on title at the Land Title Office; often for use of utilities or city or municipality in order to make repairs to pipes, etc.; no permanent structure may be built on a right of way.
Second Mortgage
Additional financing. Usually has a shorter term and carries a higher rate of interest than the First mortgage.
Statements of Adjustments
Closing statements in a real estate transaction that set out the sources of funds that make up the purchase price, adjustments to and from the purchase price, the final amount required from the purchase and the amount due to the seller. Lawyers will prepare a statement for the seller and the buyer.
Subject Clause
A statement of a condition to be fulfilled by the benefiting party (Buyer, Seller or Both) which must include a specific deadline for removal.
Term
The length of time the interest rate is fixed. It also indicates when the principal balance becomes due and payable to the lender.
Term Mortgage
A non-amortizing mortgage under which the principal is paid in its entirety upon the maturity date.
Title
Legal ownership in a property.
Title Search
A detailed examination of the ownership documents to ensure there are no liens or other encumbrances on the property, and no questions regarding the Seller's ownership claim.
Variable-Rate Mortgage
A mortgage with a fixed payment schedule, but one where repayment of the principal fluctuates, up or down, as interest rates change over time. The changing interest rate determines how much of the payment goes toward repayment of the principal.
Vendor Take-Back Mortgage
When the Seller [Vendor] 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.
Tom Davis | REALTOR®
Tom Davis Personal Real Estate Corporation
Sotheby's International Realty Canada
604 787 1456
This communication is not intended to cause or induce breach of an existing agency agreement
