Net Worth
Your financial worth, calculated by subtracting your total liabilities from your total assets.

Offer To Purchase
A written contract setting out the terms under which the buyer agrees to buy. If accepted by the seller, it forms a legally binding contract subject to the terms and conditions stated in the document.

Open Mortgage
A mortgage that allows partial or full payment of the principal at any time, without penalty.

Option Agreement
A document stipulating that, in exchange for a deposit, a specified individual is to be given the first chance of buying a property at or within a specified period of time. An option holder who does not buy at or within the specified period loses the deposit and the agreement is cancelled.

P.I.T.
Principal, interest and taxes - payments due on a regular basis under the terms of the mortgage agreement. Generally, payments are made monthly and include one-twelfth of the estimated annual municipal taxes and school taxes. Since these taxes change from year to year, this section of the mortgage will change accordingly.

P.I.T.H.
Principal, interest, taxes and heating - costs used to calculate the Gross Debt Service ratio (GDS).

Portability
A mortgage feature that allows borrowers to take their mortgage with them without penalty, when they sell their present home and buy another one.

Power of Sale
A clause commonly inserted in a mortgage that grants the creditor the right and authority, upon default in the payment of the debt, to advertise and sell the property.

Pre-Approved Mortgage
Qualifies you for a mortgage before you start shopping. You know exactly how much you can spend and at what interest rate.

Prepayment Privilege
A mortgage feature that allows the borrower to prepay a portion or all of the principal balance with or without penalty. This privilege is frequently restricted to specific amounts and times.

Principal
The mortgage amount initially borrowed, or the portion still owing on the mortgage.

REALTOR®
A real estate representative who is a member of an organization of persons engaged in the business of buying and selling real estate, such as the Ontario Real Estate Association.

Refinance
To pay off a mortgage or other registered encumbrance and arrange for a new mortgage, usually at a lower interest rate, and sometimes with a different lender.

Renewal
Re-negotiation of a mortgage loan at the end of a term for a new term.

Reserve Fund
The portion of a condominium fee that is set aside to cover future major repair and replacement costs.

Second Mortgage
A second financing arrangement, in addition to the first mortgage, also secured by the property. Second mortgages are usually issued at a higher interest rate and for a shorter term than the first mortgage.

Secondary Financing
Second, third, fourth, etc. mortgages, secured by a property "behind" the first mortgage.

Selling Broker
The REALTOR® who actually finds the buyer.

Status Certificate
A written statement of a condominium unit's current legal and financial status.

Term
The length of time during which a mortgagor pays a specific interest rate on the mortgage loan. The entire mortgage principal is usually not paid off at the end of the term because the amortization period is normally longer than the term.

Title
The legal evidence of ownership of a property. A freehold title gives the holder full and exclusive ownership of land and buildings for an indefinite period of time. In condominium ownership, land and common elements of buildings are owned collectively by all unit owners, while the residential units belong exclusively to the individual owners. A leasehold title gives the holder a right to use and occupy land and buildings for a defined period of time.

Title Search
A detailed examination of the ownership documents to ensure there are no liens or other encumbrances on the property, and no questions regarding the seller's ownership claim.

Total Debt Service Ratio (TDS)
The percentage of gross monthly income required to cover all monthly payments for housing and all other debts, such as car payments.

Unit
Term used to describe the individual home or apartment held by the owner within a condominium development.

Variable-Rate Mortgage
A mortgage for which payments are fixed, but whose interest rate changes in relationship to fluctuating market interest rates. If market rates go up, a larger portion of the payment goes to interest. If rates go down, a larger portion of the payment is applied to the principal.

Vendor Take Back Mortgage
Mortgage financing arranged between the seller of the property and the buyer. The title is transferred to the buyer. Often this type of loan is a second mortgage which the seller is willing to arrange at below market rates to ensure the buyer can purchase the house. Most of these arrangements are generally not renewable or transferable to the next owner of the house.

Zoning By-laws
Municipal or regional laws that specify or restrict land use.