Glossary G-L
Grace Period
Specified period of time to meet a commitment after it becomes due, without penalty or default. For example, most lenders allow a two-week grace period after the due date of the mortgage payment before a late fee is imposed.
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.
Highest and Best Use
Use of land that is most logical and productive. Refers to the greatest income it can bring the owner, and factors in aesthetics and benefits to the surrounding community.
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.
Homeowners Insurance
Packaged insurance policy for homeowners or tenants that covers personal liability and also property damage, such as: fire, theft, or flood.
Improvement
Any form of land development or man-made addition, such as the erection of a building or fence, to enhance the value of private property. Or an improvement to publicly owned structures, such as a sewer or waterline.
Inspection
The act of physically examining and testing a piece of property to ascertain certain information, such as a home inspection.
Interest
The cost of borrowing money, 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 payments begin. Interest, from the date your mortgage is advanced to the IAD, is due on closing.
Interest Rate
The value charged by a 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.
Lease
Contract that conveys the right to use property for a period of time in return for a consideration, usually rent, paid to the property owner.
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. For example, a $25,000 down payment (or less) can be used to purchase (control) a $400,000 home.
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 lien-holder takes action within the prescribed time, the homeowner may be obliged to pay the amount claimed by the lien-holder. Alternatively, the lien-holder may force a sale of the property to pay off the debt.
Linked Home
A residential unit that does not share a common wall with its neighbour but is attached to it. It might be attached at the garage by brick or a girder, or perhaps underground with cement.
Listing
A piece of property that is for sale.
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 mortgage loan to the market value of a property expressed as a percentage. For example, the ratio of a loan for $450,000, on a home which costs $500,000, is 90%.
