Homebuyers Glossary
There are a lot of words used in real estate that aren’t used everyday language. At Mistral, we want to make sure you feel informed and confident during every touchpoint throughout your home-buying journey.
This glossary includes commonly used terms in Canadian real estate to help you understand the process every step of the way.
A
Adjustable-Rate Mortgage (ARM): A mortgage where the interest rate changes at regular intervals based on a predetermined index.
Agreement of Purchase and Sale (APS): A legally binding contract between the buyer and seller outlining the terms and conditions of the home sale.
Amortization Period: The total time it takes to pay off a mortgage, typically ranging from 15 to 30 years in Canada.
Appraisal: An assessment of a property’s value by a licensed professional, often required by lenders to ensure the home’s value supports the loan amount.
Asking Price: The initial price set by the seller when listing their property for sale.
Assignment Sale: When the original buyer sells their rights to purchase a property before it closes.
B
Blended Payments: Mortgage payments combining both principal and interest, keeping the payment amount consistent.
Bridge Loan: A short-term loan used to bridge the gap between the sale of an existing home and the purchase of a new one.
Builder’s Lien: A legal claim filed by a contractor or builder against a property for unpaid work.
Buyer’s Market: When there are more homes for sale than buyers, giving buyers more negotiation power.
C
Capital Gains Tax: A tax on the profit made when selling a property that isn’t a primary residence.
Certificate of Completion: A document confirming that construction or renovation meets required building standards.
Closing Costs: Expenses beyond the purchase price, including legal fees, land transfer taxes, and title insurance, typically amounting to 1.5%-4% of the home's price.
Closing Date: The date when the ownership of the property is transferred from the seller to the buyer.
CMHC Insurance (Mortgage Default Insurance): Insurance required when a buyer has less than a 20% down payment, protecting the lender if the buyer defaults on the mortgage.
Conditional Offer: An offer to purchase a home that includes specific conditions (e.g., financing approval, home inspection) that must be met for the sale to proceed.
Condominium (or strata): You own the unit you live in and share ownership rights for the common areas of the building along with the development’s other owners. Monthly condo fees typically apply for maintenance.
D
Deed: A legal document that transfers ownership in the real property to the purchaser.
Deposit: An upfront payment made when submitting an offer, showing the buyer’s serious intent to purchase.
Depreciation: The decrease in value of something because it is now worth less than when you bought it.
Disbursements: Expenses incurred during the closing process, such as registration and legal fees.
Down Payment: The portion of the home’s purchase price paid upfront by the buyer, with the rest covered by a mortgage.
Dual Agency: When the same real estate agent represents both the buyer and seller in a transaction.
E
Easement: An interest in land owned by another person that benefits the person who has the easement for a specific limited purpose.
Equity: The difference between the property’s current market value and the remaining mortgage balance.
F
Fixed-Rate Mortgage: A mortgage with an interest rate that remains constant throughout the loan term.
First-Time Home Buyer Incentive: A program by the Canadian government to help first-time buyers reduce their monthly mortgage payments through shared equity.
Freehold Ownership: Ownership of the entire property, including the land.
H
High-Ratio Mortgage: A mortgage where the down payment is less than 20%, requiring CMHC insurance.
Holdback: Funds retained from a construction project until work is fully completed to satisfaction.
Home Inspection: A professional evaluation of a home’s condition, identifying potential issues or repairs before purchase.
Home Warranty: Coverage that protects new homeowners from major repair costs within a specified period after purchase.
I
Interest: The cost of borrowing money.
Interest Rate: The price paid for the use of money borrowed from a lender.
L
Land Survey: A professional measurement of a property’s boundaries and structures.
Land Transfer Tax: A tax levied by provincial or municipal governments when a property is transferred to a new owner.
Leasehold Property: A property where ownership rights are held for a specific period, but the land is leased.
Lien: A legal claim against a property for unpaid debts.
Lump Sum Prepayment: An extra payment, made in lump sum, to reduce the principal balance of your mortgage.
M
Market Value: The estimated price a property would fetch in the current real estate market.
MLS® (Multiple Listing Service): A database used by real estate professionals to list and access properties for sale.
Mortgage: A security interest given in the property to secure repayment of the loan.
Mortgage Pre-Approval: A conditional agreement from a lender specifying the maximum loan amount a buyer qualifies for.
Mortgage Term: The length of time a mortgage agreement is in effect.
N
New Home Warranty Program: Coverage if an item under the warranty needs repair within the warranty period.
O
Offer to Purchase: A written contract setting out the terms under which the buyer agrees to buy the home.
Open House: A scheduled period when a property for sale is open for potential buyers.
Operating Costs: The expenses a homeowner incurs each month.
P
Porting a Mortgage: Transferring an existing mortgage to a new property without penalties.
Possession Date: The date when the buyer takes legal ownership of the property.
Pre-Approval: A lender’s conditional approval for a mortgage amount.
Prepayment Penalty: A fee charged for paying off a mortgage early.
R
Realtor or Real Estate Agent: A person who acts as an intermediary between the seller and buyer.
Refinancing: Replacing an existing mortgage with a new one.
Reserve Fund: A savings account for unexpected condo maintenance.
S
Single-Family Detached Home: A free-standing home for one family.
Surveyor’s Real Property Report (SRPR): A document showing property boundaries and structures.
T
Tarion Warranty: A mandatory warranty program for new homes in Ontario.
Title Insurance: Insurance that protects homeowners from title-related issues.
V
Variable-Rate Mortgage: A mortgage with an interest rate that fluctuates.
Z
Zoning: Municipal regulations that dictate how a property can be used.
Did we miss any terms? If there’s a term we should add, tell us: Communities@MistralGroup.Ca