Homebuying Step by Step: Your Guide to Buying a Home in Canada
Net worth: The total financial worth of a person, calculated by subtracting liabilities (everything the person owes) from assets (everything the person owns). New home warranty program: A program available in all provinces and some territories guaranteeing that any defects in a new home will be repaired at no cost to the buyer within the period covered by the warranty. Notary: In Quebec, a notary (rather than a lawyer) handles the legal matters related to buying a home. These include protecting legal interests and reviewing any contracts. Offer to purchase: A written contract that sets out the terms and conditions under which a buyer agrees to buy a home. If the offer is accepted by the seller, it becomes a legally binding agreement. Ongoing costs: The monthly expenses that come with owning a home, including mortgage payments, property taxes, home insurance, utilities, ongoing maintenance and repairs. Open house: A set period of time when potential buyers can come to look at a house or apartment that’s for sale without an appointment. Open mortgage: A flexible mortgage loan that lets a borrower pay off or renegotiate their loan at any time, without having to pay penalties. Because of this flexibility, open mortgages usually have a higher interest rate than closed mortgages. Payment schedule: The schedule a buyer agrees to follow to pay back their mortgage loan. In most schedules, mortgage payments are made weekly, every two weeks or once a month. PITH: An acronym that stands for mortgage Principal and Interest payments, property Taxes and Heating costs, all the main costs paid by a homeowner on a monthly basis. Power of sale: A provision that gives a lender the power to sell a property if the borrower defaults on their mortgage. The ownership of the property changes hands after the sale is completed. Premium: See “Mortgage loan insurance premium.” Pre-payment options: The ability to make extra payments, increase your payments or pay off your mortgage early without incurring a penalty. Pre-payment penalty: A fee charged by your lender if you pay more money on your mortgage than the pre-payment option allows.
Principal: The amount a person borrows for a loan (not including the interest). Property (or home) insurance: Insurance that protects the owners in case their home or building is damaged or destroyed by fire or other hazards listed in the policy. Property taxes: Taxes that are charged by the municipality based on the value of the home. In some cases, the lender will collect property taxes as part of the borrower’s mortgage payments and then pay the taxes to the municipality on the borrower’s behalf. Real estate: Property consisting of buildings and/or land. Real estate agent (or “real estate broker”): A professional who acts as an intermediary between the seller and buyer of a property. They help the buyer find a home, make an offer and negotiate the best price. REALTOR.ca (formerly MLS.ca): An online service that provides descriptions of most of the homes for sale across the country. Homes on the site can be searched by location, price, size or a number of other features. For Quebec listings, the equivalent site is centris.ca . Reserve fund: A sum of money put aside by a condominium corporation for the repair or replacement of common elements such as the roof, windows, boiler, hallway carpets and other common assets and areas. Row house (or “townhouse”): A row house is one of several similar single-family homes that are joined side by side and share common walls. Security: Also called “collateral.” Property that is pledged to guarantee a loan or other obligation that can be claimed by the lender if a loan isn’t repaid. With a mortgage, the home being purchased is used as security for the loan. Semi-detached home: A home that is attached to another home on one side. Single detached home: A free-standing home (that is, not attached to any other homes on either side) intended to be occupied by a single family. Stacked townhouse: Two-storey homes stacked one on top of the other, usually in groups of four or more. Strata (or “condominium”): A type of homeownership where people own the unit they live in and share ownership of all common areas with the other owners. Common areas can include parking facilities, hallways, elevators, lobbies, gyms, swimming pools and the grounds or landscaping.
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