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. This is usually (but not always) the same as the possession date.
Amortized Mortgage: A mortgage requiring periodic payments which include both a partial repayment of the debt and interest on the outstanding balance.
Amortization Schedule: A table showing the amounts of principal and of interest comprising each level payment due at regular intervals and the outstanding principal balance of the loan after each level payment is made
Appraised Value: An estimate of a property's market value, used by lenders in determining the amount of the mortgage.
Assessed Value: The value of a property, set by the B.C Assessment Authority, and used by the local municipality for the purposes of calculating property tax.
Basis Point: A small unit of measure used to describe 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 quarter of a percent equals 25 basis points).
Blanket Mortgage A single mortgage registered against two or more individual parcels of real property.
Blended Mortgage Payments: Equal or regular mortgage payments, consisting of both a principal and an interest component.
Blended Mortgage Rate: The interest rate on an increased mortgage which is derived from a formula that takes into account the interest rate on the existing loan and the interest rate on the increase 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 purchaser.
Closing: The real estate transaction's completion, when the parties involved agree that all legal and financial obligations have been met and the deed to the property is transferred from the seller to the buyer.
Conventional Mortgage:
A mortgage loan that is 75 per cent or less of the loan-to-value ratio; and does not require insurance by CMHC or other private insurer.
Conveyance: The term used to describe the process of transferring the seller's title to the buyer and indicates all the necessary steps to complete the transfer. A conveyancing lawyer is a lawyer (or notary) responsible for the conveyance process (this is 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.
Deed: A legal document that conveys (transfers) ownership of a property to a buyer.
Easement: A legal right to use or cross (right-of-way) another person's land for limited purposes. A common example is a utility company's right to run wires or lay pipe across a 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 price for which a property can be sold and the mortgage(s) on the property. 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 doesn't meet the mortgage obligations.
High-ratio Mortgage: A mortgage that exceeds 75 per cent of the loan-to-value ratio; must be insured by either the Canada Mortgage and Housing Corporation (CMHC) or a private insurer to protect the lender against default by the borrower who has less equity invested in the property.
Land Transfer Tax: use Property Transfer Tax
Lien: Any legal claim against a property, filed to ensure payment of a debt.
Mortgage: A contract between a borrower and a lender. The borrower pledges a property as security to guarantee repayment of the mortgage debt.
Mortgage Insurance: Government-backed or private-backed insurance protecting the lender against the borrower's default on high-ratio (and other types of) mortgages.
Mortgage Prepayment Penalty: Is 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 a 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.
Prepayment Clause
A clause inserted in a mortgage, which gives the mortgagor the privilege of payingall or part of the mortgage debt in advance of the maturity date.
Principal: The mortgage amount initially borrowed or the portion still owing on the mortgage. Interest is calculated 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 the property's condition on the spot.
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: Payment to the provincial government for transferring property from the seller to the buyer. The rate is one per cent of the first $200,000 of the fair market value and two per cent of the remainder.
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.
State of Title Certificate: A copy of the title that lists charges against the property, such as liens, mortgages or rights of way.
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-to" Clause: A statement of a condition to be fulfilled by the benefiting part which must include a specific deadline for removal.
Term Mortgage A non-amortizing mortgage under which the principal is paid in its entirety upon the maturity date. Sometimes called a straight loan.
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 for which payments are fixed, but whose interest rate changes in relationship to fluctuating market interest rates. If mortgage rates go up, a larger portion of the payment goes to interest. If rates go down, a larger portion of the payment is applied to the principal.
Vendor Take-Back Mortgage: When sellers use their equity in a property to provide some or all of the mortgage financing in order to sell the property.
Zoning Regulations:
Strict guidelines set and enforced by municipal governments regulating how a property may or may not be used.
