Words to Know When Buying a Home
Housing terms can be complex for those who aren’t familiar with this industry. Our CountryWide home buyer’s glossary will help you get familiar with terminology used commonly in this marketplace.
Adjustable interest rate mortgage:
A type of mortgage where, based on changes in the market rates, both the interest rate and the monthly payments vary.
Surrounding features that provide comfort, convenience or enjoyment. Master-planned communities may include amenities such as parks and walking trails integrated into the neighbourhood, or schools and sports facilities.
The period of time needed to pay off a mortgage in its entirety, provided all payments are made on time and all other conditions are met.
The name for a form used to apply for a mortgage. This form will require all the relevant personal and financial information of the individual applying.
The current market value of a home, as estimated.
A certified professional who performs home appraisals.
The increase in value of a home or other possession, over time, since it was purchased.
A lending institution, such as a bank, that the Government of Canada has authorized to make loans. CMHC-insured mortgages can only be offered by approved lenders.
Architectural controls are used to define details such as the look and feel of homes, their size, and how many of the same type of home can be built on each street. These rules are used to guarantee that real estate development is efficient and that the communities created are attractive places to live.
A legal document requiring that the individual buying a home take over the mortgage of the previous owner, or the builder.
A regular mortgage installment plan where an individual pays toward both the mortgage principal and the interest.
A type of loan used to allow homebuyers to get financing so that they can make a down payment and pay closing costs on a new home before selling the home they currently own.
An individual or company that builds homes.
The limit on an interest rate for an adjustable rate mortgage. This limit can apply to each adjustment or over the entire life of the mortgage.
Canada Mortgage and Housing Corporation (CMHC):
Canada’s authority on housing. CMHC contributes to the stability of the housing market and financial system by providing support for Canadians in need, and by conducting objective housing research and providing that information to Canadian governments, consumers and the housing industry.
Certificate of status (or “estoppel certificate”):
A document that defines both the financial status and the legal status of a condominium corporation. (This certificate is not applicable in Quebec.)
Certificate of location (or “survey”):
A document that outlines the legal boundaries and dimensions of a property. It defines the location of any of the buildings and says whether anyone else is allowed to cross over the property for any specified reasons.
A type of mortgage that can’t normally be paid off or renegotiated before the end of the term, not without the lender’s permission and a financial penalty. Closed mortgages sometimes allow for faster payments, but this must usually be specified in the mortgage agreement beforehand.
This is the final stage of the home buying process. After the lender approves the application the homebuyer and lender sign the security-agreement note for the mortgage loan, which defines the terms and conditions of the loan. The final step of the process is when the funds for the loan are given over to the home buyer's closing agent.
The representative who oversees the closing and serves as a witness for the signing of the closing documents. This is usually an attorney or a representative of the title agency.
Legal fees, transfer fees, disbursements, etc. All these costs must be paid when buying a home, and they are in addition to the down payment and applicable taxes. Closing costs usually range from 1.5% to 4% of the purchase price, and must be paid the day the buyer officially takes ownership of the home.
The date when the new owner takes possession of the home and the sale becomes final.
The financial statement that records all funds received and any still expected at the close of your home.
Commitment letter (or “mortgage approval):
This letter is a written approval from a lender to a borrower that also details the terms, conditions and amount for which said mortgage loan is being granted.
A combination of interest on both the original principal interest that has already been earned on that principal.
An offer to purchase a home that relies on the successful completion of one or more conditions in order for the sale to be completed. One such example of a condition could be a buyer being approved for a mortgage.
Condominium (or “strata”):
A type of homeownership where people have sole ownership of their unit and share ownership of all common areas with their neighbours. Common areas can include parking facilities, lobbies, hallways, elevators, gyms, swimming pools and outdoor areas.
Someone who is responsible for the construction of a home, or its renovation. This can include workmanship, and also the scheduling and managing of subcontractors and suppliers.
A mortgage loan of less than or equal to 80% of the value of a property. Because the down payment on a conventional mortgage is at least 20% they don’t usually require mortgage loan insurance.
An offer made to the buyer of a home by the seller after rejecting that buyer’s prior offer. The counteroffer will include a change of some sort to the original offer, such as the price, closing date or other details.
A company that collects information on an individual’s bill-paying and borrowing habits and then provides that information to lenders, helping them to assess whether they should lend money to that individual or not.
Credit history (or “credit report”):
The report a lender uses to decide whether an individual is eligible for a mortgage.
A numerical rating that indicates an individual’s creditworthiness based on a number of criteria.
How attractive a home looks from the street. Features such as good landscaping and a well-maintained exterior can help improve a home’s curb appeal.
Debt to income ratio:
A formula used by lenders to determine the amount of the loan you may qualify for.
A legal document transferring ownership of a home from a seller to a buyer.
To fail to make a mortgage payment on time or otherwise abiding by the terms of a mortgage loan agreement. A lender can charge a penalty or take legal action to take possession of the borrower’s home if they default on their mortgage payments.
The act of failing to make a mortgage payment on time.
Money a buyer places in trust as a show of commitment when making an offer to purchase a home. The deposit is held by a real estate agent or lawyer, and once the sale is complete that money is transferred to the seller.
A decrease in the value of a home since the time of purchase.
The portion of the purchase price of a home that is not financed by a mortgage loan. The buyer pays the down payment from their own funds or from some other source before getting a mortgage to cover the remainder.
A legal right to use property owned by another individual or company for a specific limited purpose, such as a utility company having an easement allowing them to pass through a property or access utility lines on the property.
Architectural blueprints of a home’s exterior and interior. These are usually created by an architect, and typically convey size, style and finishing options. Elevations are created to give the buyer and construction team direction and a feel for the finished product.
Money a homeowner sets aside on a regular basis in case they need to pay for emergencies or major repairs to their home. 5% of one’s monthly income is usually recommended as savings for emergencies.
The monetary value a home has after subtracting the amount of the homeowner’s mortgage and any other debts owed on the property. As the mortgage loan is paid down over time equity usually increases, and changes in the market or improvements to a home can also affect its equity.
A process wherein a third party acts as a stakeholder for both you and CountryWide Homes, carrying out closing instructions and assuming responsibility for paperwork and funds.
A holding account for the amount a mortgage borrower pays each month which the lender uses to pay for the borrower's taxes and any other periodic debts against the property such as their homeowner's insurance and, if applicable, their mortgage insurance.
Estoppel certificate (or “certificate of status”):
A certificate outlining the financial and legal status of a condominium corporation.
Features and finishes:
Material specifications and the finishing of those materials in the home, like cabinetry, lighting, flooring, heating, windows, doors, etc. CountryWide’s features and finishes lists are supplied during the sales process to help home buyers understand what’s included in their new home.
Fixed interest rate mortgage:
A mortgage with rate that won’t change during for the entirety of its term.
FlexHousingTM (or “universal design”):
An approach to housing that encourages the design and construction of homes that can keep pace with the changing needs, mobility or lifestyle of the occupants by being easily and inexpensively modified.
A legal process that allows the lender to take possession of a property if the borrower defaults on a loan. The lender may then sell that property to cover the unpaid debt.
A form of homeownership where one buys the right to have full and exclusive ownership of a home, and the land it sits on, for an indefinite period of time. In contrast, leasehold ownership gives one the right to use and occupy the land and the property on it for only a defined, limited period of time.
Gross debt service (GDS) ratio:
The percentage of an individual or household’s gross monthly income that goes toward the mortgage principal and interest, property taxes and heating costs, plus 50% of any condominium maintenance fees. A borrower’s GDS ratio must be less than or equal to 32% in order to qualify for a mortgage.
Gross monthly income:
The total monthly income of an individual or household before taxes and any other deductions.
A mortgage loan where the loan amount is for more than 80% of the value of a property and, therefore, the down payment is less than 20%. A high-ratio mortgage will usually need to be insured against default with mortgage loan insurance, provided by CMHC or through a private company.
A thorough examination and assessment of the state and condition of the structural, mechanical and electrical systems of a home by a qualified professional.
A professional who examines a home for anything that is unsafe or in need of repair or replacement. They also check if the home has had any major problems in the past.
Home insurance premium:
The amount homeowners pay on an annual or monthly basis for insurance.
A mandatory real estate insurance policy protecting the buyer’s property against loss caused by fire, some natural causes, vandalism, etc. These policies may also include coverage against personal liability and theft, etc.
A room-by-room tour of your new CountryWide Home, during which we provide helpful product and warranty information and familiarize you with the functions of your home.
A monthly plan used to track household income and expenses and make sure household members are both living within their means as well as meeting their savings and investment goals.
A professional who helps homeowners choose between and purchase different types of insurance, like property insurance, life and disability insurance, and mortgage loan insurance.
The cost of borrowing money. Interest is usually paid to the lender in regular installments along with repayment of the original loan (the principal).
The rate used to calculate how much interest the borrower must pay to the lender for the use of the money being loaned to them.
A system which is used to record legal interests in a piece of land, including the ownership and the transfer of ownership of said land.
A professional who surveys a property in order to provide a land survey (or “certificate of location”). A real estate agent usually helps coordinate the survey with the seller, but if the seller doesn’t have a survey, or if their survey is more than five years old, the buyer will likely need to hire a surveyor before they can get a mortgage.
Land transfer tax:
A tax charged by many provinces and municipalities which is usually calculated as a percentage of the purchase price and which the buyer must pay upon closing.
A legal advisor, licensed to practice law, who will protect the legal interests and review any contracts for their client.
A bank, trust company, pension fund, credit union, insurance company or other institution that loans people money so that they may buy a home.
A claim placed against a property by another individual or company for money owed by the owner or previous owner of said property.
Loan to Value (LTV):
A financial term used by lenders to explain the ratio of the amount borrowed compared to the appraised value or sales price of the property, expressed as a percentage.
A piece of land within a master-planned community. When you purchase a new home in a community from CountryWide, you’re purchasing the lot and the home that will be constructed on it. Lot sizes will vary from one community to the next and the homes that can be built may also vary.
Lump sum prepayment:
An extra payment that is made, with or without a penalty, to reduce the principal balance of a mortgage. Lump sum payments can help borrowers pay off their mortgage sooner by saving on interest costs.
A fully detailed design overview of a community. The overall design typically features everything from the style of homes, to the communities’ streetscapes, parks, trails commercial zones and greenspaces. Each CountryWide community offers something slightly different so home buyers are encouraged to visit our community sections on our web site or our sales centres in order to see which community is right for you.
The last day of the term of a mortgage. This is the day on which the mortgage loan must either be paid in full, renegotiated or renewed.
The type of house that CountryWide Offers. Typically, each model has 3 different elevations; however, the rest of the home will often share the same square footage and floor plans.
A home that CountryWide builds and furnishes within various communities for sales presentation purposes. It’s purpose is to allow home buyers to physically experience the build quality and design that goes into each and every home.
A loan given from a lender to a buyer for the purpose of helping with the purchase of a home or property. The mortgage loan is usually repaid in a regular series of payments that generally includes both the interest and the principal.
Mortgage approval (or “commitment letter”):
A written notification from a lender to a borrower saying that, under a specific set of terms and conditions, a mortgage loan of a specific amount has been approved.
A professional who works for a borrower to find a mortgage that best suits them by looking into offers from many different lenders on their behalf.
Mortgage life insurance:
Insurance that protects the family of a borrower by paying off their mortgage if the the case of death.
Mortgage loan insurance:
Insurance that protects the lender against the buyer defaulting on a mortgage. Mortgage loan insurance is provided by CMHC or by another private insurer and is often required for any mortgage where the down payment is less than 20% of the purchase price of a home.
Mortgage loan insurance premium:
The amount home buyers have to pay to CMHC or another private company to insure their mortgage against default if their down payment is less than 20% of the purchase price. Premiums can be paid separately or included in the regular mortgage payments, and are calculated as a percentage of the mortgage loan, based on the details of the down payment.
A regular payment that most often includes both the loan principal and interest.
The mortgage company employee who is responsible for collecting a completed application and all supporting documents. This loan packet is then submitted to underwriting.
The length of time, usually between 6 months and 10 years, that the conditions of a mortgage, such as the interest rate and payment schedule, are in effect. At the end of the term, the mortgage loan must either be paid in full, renewed, or renegotiated, most often with new conditions.
The total monetary worth of an individual, calculated by subtracting debts from assets.
Offer to purchase:
A written contract that, if accepted by the seller, sets out the terms and conditions of a legally binding agreement between the buyer and seller wherein the buyer agrees to buy a home.
The monthly expenses that come with owning a home. These expenses include mortgage payments, home insurance, property taxes, utilities, ongoing maintenance, etc.
A set period of time during which a house or apartment that’s for sale may be viewed without an appointment by potential buyers.
A flexible mortgage loan which lets a borrower pay off or renegotiate their loan at any time, without having to pay penalties. This flexibility usually comes with a higher interest rate than closed mortgages.
The schedule a buyer agrees to follow when paying back their mortgage loan. Mortgage payments are usually made either weekly, every two weeks or once a month.
Developing a community all at once is a tremendous undertaking; therefore, CountryWide often plans, sells and executes the construction of homes in phases. The phased approach allows home buyers to take occupancy of their home in a more realistic timeframe.
An acronym that stands for mortgage Principal and Interest payments, property Taxes and Heating costs. These are all of the main costs that a homeowner pays on a monthly basis.
Power of sale:
A provision giving power of sale of a property to a lender should the borrower default on their mortgage.
See “Mortgage loan insurance premium.”
The ability to make extra payments, increase payments or pay off a mortgage early without incurring penalties.
A fee charged by a lender if a borrower pays more money on their mortgage than the prepayment option permits.
The amount an individual borrows for a loan, not including interest.
Property (or home) insurance:
Insurance protecting the owners should their home or building be damaged or destroyed by fire or by any other hazards as listed in their policy.
Taxes charged by the municipality based on the value of the home. In some cases it is possible for the lender to collect those taxes as part of the borrower’s mortgage payments and then pay them on behalf of the borrower.
A written document confirming your decision to buy your new home and CountryWide Home’s decision to sell under stated terms and conditions.
A property consisting of buildings and/or land.
Real estate agent (or “real estate broker”):
A professional who acts as an intermediary between a property’s seller and buyer. They help the buyer find a home, make an offer on it and negotiate the best price for it.
A sum of money put aside by a condominium corporation to repair or replace common elements such as the roof, windows, hallway carpets, amenities room, boiler, etc.
Row house (or “townhouse”):
A row house is a single-family home that is joined side by side and shares common walls with other row houses.
Also called “collateral.” Property that is committed to guarantee a loan and which can be claimed by the lender if the loan isn’t repaid. With a mortgage, the home being purchased is used as security for the loan.
A home which is attached to another home on one side.
A list of the money paid out and received by the buyer and CountryWide Homes at closing.
Single detached home:
A free-standing home, unattached on any side, intended for occupation by a single family.
Two-storey homes that come stacked one on top of the other, often in groups of four or more.
Strata (or “condominium”):
A type of homeownership where individuals own the unit they live in and share ownership of common areas with the other owners. These common areas may include parking facilities, elevators, hallways, lobbies, gyms, grounds, etc.
Survey (or “certificate of location”):
A legal document delimiting a property. It specifies the location of any buildings and defines whether any other individual has the right to cross over the property for any specific purpose.
A neighbourhood that protects the environment while still meeting the needs of the residents.
The regulator of the new home building industry in Ontario. Tarion licenses all new home and condominium builders in the province, ensuring that all new homeowners receive the warranty coverage they are entitled to by law.
A document giving the holder legal ownership of a property.
Insurance against losses or damages that could occur in the case of anything that could affect the title to a property, such as a defect in the title, a lien, an encumbrance, etc.
Total debt service (TDS) ratio:
The percentage of an individual or household’s gross monthly income going toward paying the mortgage principal and interest, property taxes and heating costs, as well as all other debt obligations such as their car payments, credit card debt, or other personal loans. To qualify for a mortgage, the borrower’s TDS ratio must be less than or equal to 40%.
See “Row house.”
The process by which, prior to rendering a loan decision, a lender much review an application, documentation and property.
Universal design (or “FlexHousingTM”):
An innovative approach to housing. Universal design encourages the process of designing and constructing homes to be something that can be easily and inexpensively modified so that it can keep pace with changes in the needs, mobility or lifestyle of the occupants.
Variable interest rate mortgage:
A mortgage where the interest rate changes based on the current market conditions. The payments don’t generally change, but the amount of each payment that goes toward the principal or the interest on the loan changes as interest rates do.
The seller of a property.
Vendor take-back mortgage:
A type of mortgage where the seller, rather than a bank or other financial institution, finances the mortgage loan on the buyer’s behalf.