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.
estimate of a property's value. Asking (list) price: The price placed on the
property for sale by the seller. Blended payments: Payments consisting of
principal and interest components, paid during the amortization period of a
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.
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.
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,
buyer agency relationship arises automatically, without a written agreement
establishing the relationship.
person being represented by an agent. The agent owes the client the duties of
utmost care, integrity, confidentiality and loyalty. Closing: The day the
legal title to the property changes hands.
Mortgage and Housing Corporation. A Crown corporation providing information
services and mortgage loan insurance.
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.
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.
person who receives valuable information and assistance from a real estate
broker or salesperson, but is not represented by that individual.
Debt-service ratio: The measurement of debt payments to gross household
income which may include, in addition to the main wage earnerŐs salary,
salaries of other wage earners, commissions, bonuses, overtime, etc.
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 agentŐs
difference between the value of the property and the amount owing (if any) on
institutions: Banks, credit unions, insurance or trust companies.
GE Capital Mortgage
Insurance Company: GE Capital Mortgage Insurance Company is the only
private sector source of mortgage insurance to lenders in Canada. 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.
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%.
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
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.
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.
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.
person or financial institution lending the money, secured by a mortgage.
property owner borrowing the money, secured by a mortgage.
Canadian RealEstate Association