THESE SIMPLE JARGON-FREE definitions AND examples WILL help YOU ON YOUR WAY HOME.
The period of time, most often 15, 20 or 25 years, required to reduce a debt to zero when payments are made regularly.
A process for estimating the market value of a particular property.
A certificate that must be obtained from the municipality by the prop- erty owner or contractor before a building can be erected or repaired. It must be posted in a conspicuous place until the job is completed and passed as satisfactory by a municipal building inspector.
A lending institution authorized by the Government of Canada through CMHC to make loans under the terms of the National Housing Act. Only Approved Lenders can negotiate mortgages which require mortgage loan insurance.
Costs, in addition to the purchase price of the home, such as legal fees, transfer fees and disbursements, that are payable on the closing date. Closing costs typically range from 1.5%-4% of a home’s selling price.
A legal document signed by a home buyer that requires the buyer to assume responsibility for the obligations of a mortgage by the builder or the original owner.
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.
The date on which the sale of a property becomes final and the new owner takes possession.
Canada Mortgage and Housing Corporation. A Crown corporation that administers the National Housing Act for the federal government and encourages the improvement of housing and living conditions for all Canadians.
CMHC also creates and sells mortgage loan insurance products.
Conditional Offer/ Conditions of Sale
An Offer to Purchase that is subject to specified conditions, for example, the arranging of a mortgage. There is usually a stipulated time limit within which the specified conditions must be met.
A mortgage which secures a loan by way of a promissory note. The money which is borrowed can be used to buy a property or for another purpose such as home renovation or for a vacation.
Commitment Letter/ Mortgage Approval
Written notification from the mort- gage lender to the borrower that approves the advancement of a specified amount of mortgage funds under specified conditions.
Conventional Mortgage Loan
A mortgage loan up to a maximum of 75% of the lending value of the property. Mortgage loan insurance is not required for this type of mortgage.
A clause in a legal document which, in the case of a mortgage, gives the parties to the mortgage a right or an obligation.
For example, a covenant can impose the obligation on a borrower to make mortgage payments in certain amounts on certain dates. A mortgage document consists of covenants agreed to by the borrower and the lender.
A legal document which is signed by both the vendor and purchaser, transferring ownership. This document is registered as evidence of ownership.