Amortization
The period of time, most often 15, 20 or 25 years, required to reduce a debt to zero when payments are made regularly.

Appraisal
A process for estimating the market value of a particular property. It can help the buyer determine what price to offer. It can also be used by the lender for mortgage purposes. The appraised value seldom matches the actual purchase price as other factors influence price.

Appreciation
The increase of a property's value over time.

Approved Lender
A lending institution authorized by the Government of Canada through CMHC to make loans under the terms of the National Housing Act. Only Approved Lenders can negotiate mortgages which require mortgage loan insurance.

Assessment
The value of a property, set by the local municipality, for the purposes of calculating property tax.

Assumable Mortgage
A mortgage held on a property by the seller that can be taken over by the buyer, who then accepts responsibility for making the mortgage payments.

Assumption Agreement
A legal document signed by a homebuyer that requires the buyer to assume responsibility for the obligations of a mortgage by the builder or the original owner.

Blended Mortgage
A combination of two mortgages, one with a higher interest rate than the other, to create a new mortgage with an interest rate somewhere between the two original rates.

Blended Payment
A mortgage payment that includes principal and interest. It is paid regularly during the term of the mortgage. The payment total remains the same, although the principal portion increases over time and the interest portion decreases.

Building Permit
A certificate that must be obtained from the municipality by the property owner or contractor before a building can be erected or repaired. It must be posted in a conspicuous place until the job is completed and passed as satisfactory by a municipal building inspector.

Buy-Down
When the seller reduces the interest rate on a mortgage by paying the difference between the reduced rate and market rate directly to the lender, or to the buyer, in one lump sum or monthly installments.

Closed Mortgage
A mortgage that locks you into a specific payment schedule for a specific amount of time. A penalty usually applies if you repay the loan in full before the end of the time period.

Closing Costs
Costs, in addition to the purchase price of the home, such as legal fees, transfer fees and disbursements, that are payable on the closing date. Closing costs typically range from 1.5% - 4% of a home's selling price.

Closing Date
The date on which the title and keys to a property are transferred from the seller to the buyer, and money is transferred from the buyer to the seller. The buyer is now the new owner.

CMHC
Canada Mortgage and Housing Corporation. A Crown corporation that administers the National Housing Act for the federal government and encourages the improvement of housing and living conditions for all Canadians. CMHC also creates and sells mortgage loan insurance products.

Collateral Mortgage
A mortgage which secures a loan by way of a promissory note. The money which is borrowed can be used to buy a property or for another purpose such as home renovation or for a vacation.

Commitment Letter / Mortgage Approval
Written notification from the mortgage lender to the borrower that approves the advancement of a specified amount of mortgage funds under specified conditions.

Common Elements
The portions of a condominium development owned in common (shared) by the unit owners.

Conditional Offer / Conditions of Sale
An Offer to Purchase that is subject to specified conditions, for example, the arranging of a mortgage. There is usually a stipulated time limit within which the conditions must be met.

Condominium
Shared ownership in property. Owners have title (ownership) to individual units and a proportionate share in the common elements.

Condominium Fee
A monthly fee paid by condominium owners for maintaining the development's common areas.

Conventional Mortgage Loan
A mortgage loan up to a maximum of 75% of the lending value of the property. Normally, mortgage loan insurance is not required for this type of mortgage.

Counter Offer
One party's written response to the other party's offer during negotiation of a real estate purchase between buyer and seller.

Covenant
A clause in a legal document which, in the case of a mortgage, gives the parties to the mortgage a right or an obligation. For example, a covenant can impose the obligation on a borrower to make mortgage payments in certain amounts on certain dates. A mortgage document consists of covenants agreed to by the borrower and the lender.

Deed
A legal document which is signed by both the seller and buyer, transferring ownership. This document is registered as evidence of ownership.

Default
Failure to abide by the terms of a mortgage loan agreement. A failure to make mortgage payments (defaulting on the loan) may give cause to the mortgage holder to take legal action to possess (foreclose) the mortgaged property.

Deposit
Money from the buyer placed in trust when an Offer to Purchase is made. The sum is held by the real estate brokerage or lawyer until the sale is closed, and then paid to the seller.

Discharge of Mortgage
A document signed by the lender and given to the borrower when a mortgage loan has been repaid in full.

Down Payment
The portion of the house price the buyer must pay up front from personal resources, before securing a mortgage. It generally ranges from 5%-25% of the purchase price.