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Agreement of Purchase and Sale:
A contract by which one party agrees to sell and another agrees to purchase.

Amendment:
Any agreement may be modified at any time provided that such changes are in writing and agreed to by both/all parties. This is called an amendment. It constitutes a "new" agreement.

Amortization:
Period of time to reduce debt to zero when payments are made regularly.

Appraisal:
Process by which the "mortgage lending value" of a property is determined.

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Bridge Financing:
Interim financing to bridge between the closing date on the purchase of the new home and the closing date on the sale of the current home.

Broker:
An intermediary between the buyer and seller who is licensed to carry out specific activities.

Building Permit:
A certificate that must be obtained from the municipality by the property owner or contractor before a building can be erected or substantially renovated.

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Chattel:
Something you can pick up and remove from a property i.e. NOT affixed to the property. [Examples are furniture, appliances, gardening tools, inventory, etc.] Chattels are assumed by default to be excluded from a purchase - unless specifically written into the Purchase & Sale Agreement. See FIXTURE.

Closing Date:
The date of which the sale of the property is concluded and the new owner takes possession. In essence, the money is given to the owner; the deed is given to the purchaser.

Commitment:
A notice from a mortgage lender to a prospective borrower that the lender will advance mortgage funds of a specific amount under certain conditions.

Condition:
A condition in a contract that calls for the performance of some well-defined action before the agreement becomes firm and binding on the parties.

Conditional Offer:
An offer to purchase subject to specified conditions. These conditions could be the arranging of a mortgage, or the selling of a present home. Usually a time limit in which the specified condition must be met is stipulated.

Conventional Mortgage:
A mortgage loan of up to a maximum of 75% of the lending value of the property for which a lender does not require loan insurance.

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Debt Service Ratio:
The percentage of the borrower's income that will be used for monthly debt payments.

Default:
Non-payment of instalments that are due under the terms of the mortgage.

Deposit:
Payment of money or other securities in consideration as a pledge for fulfilment of a contract.

Discharge:
The complete removal of a mortgage encumbering a property.

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Easement:
The right acquired for access to or over another person's land for a specific purpose, such as for a driveway or public utilities.

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Fixture:
Something that is "affixed" to the property (nailed on, screwed to, installed in, etc.). Consider this to be the opposite of a Chattel, in the sense you can't just pick up a fixture and carry it away from the property. [Examples include light fixtures, curtain hardware, built-in dishwasher, furnace, etc.]. Fixtures are assumed by default to be included in a purchase - unless specifically written as being excluded from the Purchase & Sale Agreement. See CHATTEL.

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High Ratio Mortgage:
A mortgage that exceeds 75% of the property's lending value, and which is insured through a mortgage insurance plan.

Hold-back:
An amount of money withheld by the lender during the progress of construction of a house to ensure that construction is satisfactory at every stage. The amount of hold-back is generally equivalent to the estimated cost to complete the renovation or construction.

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Mortgage Insurance Premium:
A premium, which is added to the mortgage and paid by the borrower over the life of the mortgage. The mortgage insurance insures the lender against loss in case of default on the part of the borrower.

Mortgage Life Insurance:
A form of reducing term insurance available for all mortgagors. In the event of a death of the owner or one of the owners, the insurance pays the balance owing on the mortgage. The intent is to protect survivors from losing their home.

Mortgagee:
The lender, the person or institution that lends the money.

Mortgagor:
The borrower, the person(s) who borrow the money.

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Offer to Purchase:
A written contract setting forth the terms under which a purchaser agrees to purchase a property. Upon acceptance by the seller, it forms a contract, which will form the basis for the final document to be prepared by a lawyer or notary. It includes the legal and/or municipal description (this may consist of lot numbers as well as street address), purchase price, closing date, and lists specific items included as part of the sale. Offer & counter offers are communicated back and forth by the parties; upon acceptance by all parties, the document becomes the Agreement of Purchase & Sale.

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P-I-T:
Principal, interest and taxes due on a mortgage.

P & I:
Principal and interest due on a mortgage. Referred to as the monthly mortgage payment.

Penalty:
A sum of money paid to a lender for the privilege of prepaying a mortgage in part or in total, prior to the end of the contracted term.

Power of Sale:
The right of a mortgagee to force the sale of the property without judicial proceedings should a payment default occur.

Prepayment Privilege:
The right of the borrower to prepay a specified amount of the principal balance, usually at predetermined intervals - often on the anniversary.

Prepayment:
Full or partial payment of all or part of the principal, separate from the regular payments called for under a mortgage agreement, and in advance of the term's due date.

Principal:
The amount of capital borrowed, and owing to the lender at any point in time.

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Rate (interest):
The rate of return the mortgagee receives for lending the money to the mortgagor.

Real Estate:
Colloquially referred to as real property, leasehold and business whether with or without premises, fixtures, stock in trade, goods or chattels. The "real" in real estate is the "real" property itself, and represents the rights of ownership to the indestructible "land"!

Roll-Over Mortgage:
A mortgage where the interest rate is established for a specific term. At the end of this term, the mortgage is said to "roll-over" and the borrower and lender extend the loan under new/revised terms and conditions. If satisfactory terms cannot be agreed upon, the lender is entitled to be repaid in full. In this case, a borrower may seek alternative financing.

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Sales Representative:
A licensed individual operating through a licensed Real Estate Broker authorized to trade in real estate. [Note: the broker is the "agent" by law, the real estate professional is a "representative" of the agent. In colloquial language, the representative is referred to as the real estate agent.

Survey:
The accurate and "legal" measurement of land and its structures, fences, etc. there on. Plotted graphically and presented with all explanatory notes. [Sealed by an Ontario Land Surveyor]

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Term:
The length of time a mortgage has been agreed to with respect to rate of interest, terms and conditions. Upon maturity (the end of the term) the principal is due, usually resulting in the arrangement of a new mortgage with the same or a different lender.

Title:
Right to and evidence of ownership.

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Vendor Take Back (VTB Mortgage):
Where the seller of a property provides some or all of the mortgage financing in order to sell the property.

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Waiver:
When an agreement contains a condition, the beneficiary of the condition (usually the purchaser) must deal with the condition within some time limit. At the end of the time, or upon the condition being satisfied, the agreement either becomes binding automatically, or the condition must be waived in writing. A "waiver" is a written record, signed, which waives the condition.

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Zoning Laws:
Municipal laws governing or restricting the use of land for specific purposes.