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

Encroachment
An intrusion onto an adjoining property. A neighbour's fence, storage shed, or overhanging roof line that partially (or even fully) intrudes onto your property are examples of encroachments.

Encumbrance
A registered claim for debt against a property, such as a mortgage.

Equity
The difference between the price for which a home could be sold and the total debts registered against it. Equity usually increases as the outstanding principal of the mortgage is reduced through regular payments. Market values and improvements to the property also affect equity.

First Mortgage
The first security registered on a property. Additional mortgages secured against the property are "secondary" to the first mortgage.

Foreclosure
A legal procedure in which the lender gets ownership of the property if the borrower defaults on the mortgage loan.

F.S.B.O.
For Sale By Owner

Gross Debt Service Ratio (GDS)
The percentage of the borrower's gross monthly income that will be used for monthly payments of principal, interest, taxes, heating costs and half of any condominium fees.

High-ratio Mortgage
A mortgage loan in excess of 75% of the lending value of the property. This type of mortgage must be insured - for example, by CMHC - against payment default.

Holdback
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. A standard holdback amount is 10% of the total cost of the building project.

Interest
The cost of borrowing money. Interest is usually paid to the lender in installments along with repayment of the principal loan amount.

Interest Adjustment Date (IAD)
A date from which interest on the mortgage advanced is calculated for your regular payments. This date is usually one payment period before regular mortgage payments begin. Interest due, from the date your mortgage is advanced to the IAD, is due on closing.

Interest Rate
The value charged by the lender for the use of the lender's money expressed as a percentage.

Joint Tenancy
A form of ownership in which two or more individuals (often spouses) have an equal share in the ownership of a property. In the event of one owner's death, his or her share is automatically transferred to the surviving owner(s), apart from the deceased's will.

Land Transfer Tax
A fee paid to the municipal and/or provincial government for the transferring of property from seller to buyer. The tax amount is based on the purchase price.

Lending Value
The purchase price or market value of a property, whichever is less.

Leverage
Controlling a large asset with a relatively small amount of cash. In real estate, a $25,000 downpayment (or less) can be used to purchase (control) a $100,000 home, for example.

Lien (Mechanic's)
A claim against a property for money owing. A lien may be filed by a supplier or a subcontractor who has provided labour or materials but has not been paid. A lien must be properly filed by a claimant. It has a limited life, prescribed by statute that varies from province to province. If the lienholder takes action within the prescribed time, the homeowner may be obliged to pay the amount claimed by the lien-holder. Alternatively, the lienholder may force a sale of the property to pay off the debt.

Listing Agreement
The contract between the listing brokerage and an owner, authorizing the REALTOR® to facilitate the sale or lease of a property.

Listing Broker
The REALTOR® who signs a contract with an owner to sell their property.

Loan-to-value Ratio
The ratio of the loan to the lending value of a property expressed as a percentage. For example, the loan-to-value ratio of a loan for $90,000 on a home which costs $100,000 is 90%.

Maturity Date
The last day of the term of the mortgage agreement. On this day the mortgage loan must be either paid in full or the agreement renewed.

Mortgage
A mortgage is security for a loan on the property that you own. It is your personal guarantee to repay the loan as well as a pledge of the property as security for the loan.

Mortgage Broker
A licensed individual who, for a fee, brings together a borrower in search of a mortgage and a lender willing to issue that mortgage.

Mortgage Life Insurance
Insurance that pays off the mortgage debt, should the insured borrower die. This insurance can be conveniently purchased through your lender and the premium added to your mortgage payments. However, you may want to compare rates for equivalent products from an insurance brokerage.

Mortgage Loan Insurance
If you have a high-ratio mortgage (more than 75% of the purchase price), your lender will require mortgage loan insurance in case of default - available from CMHC or a private insurer. The insurance premium will cost between 0.5% and 3.75% of the amount of the mortgage (additional charges may apply).

Mortgage Payment
The regular installments made towards paying back the principal and interest on a mortgage.

Mortgagee
The lender who provides the mortgage loan.

Mortgagor
The borrower who pledges the property as security for the loan.

Multiple Listing Service® (MLS®)
A system for relaying information to a group of member REALTORS® about properties for sale.