Navigating the real estate market often involves deciphering a variety of specialized terms and jargon. Success in buying or selling property necessitates an understanding of these terms, which span across different professions like finance, legal, government, construction, and real estate itself.
Here’s a brief guide to some key real estate terminology, from A to Z:
- Amortization: The time period (often 25 years in Ontario) over which the full mortgage amount will be paid.
- Appraisal: A professional estimate of a property’s market value, used by lenders for mortgage considerations.
- Assessment: A property’s value set by local municipalities for property tax calculations.
- Assumable Mortgage: A mortgage that can be transferred from the seller to the buyer, who then assumes payment responsibility.
- Blended Mortgage Payments: Regular payments that include both principal and interest components.
- Broker: A licensed real estate professional in Ontario, aiding in property sales, leases, or exchanges.
- Bridge Financing: Short-term borrowing against home equity, often used during property transactions.
- Buy-down: A seller’s method to make a property more appealing by reducing the mortgage interest rate.
- Closed Mortgage: A mortgage that has significant penalties for early payment or refinancing.
- Conventional Mortgage: A primary mortgage up to 75% of a property’s appraised value or purchase price.
- Debt Service Ratio: A measure determining a borrower’s housing cost capacity, including mortgage and taxes.
- Easement: A legal right to use someone else’s land for a specific purpose, like utility access.
- Encroachment: Unauthorized intrusion of a structure or object onto another’s property.
- First Mortgage: The primary security on a property, with subsequent ones termed ‘secondary’.
- High-Ratio Mortgage: A mortgage exceeding 75% of the property’s value or purchase price.
- Listing Agreement: A contract authorizing a REALTOR® to facilitate a property’s sale or lease.
- Mortgage: A borrower’s contract pledging property as security for loan repayment.
- Mortgage Term: The duration for loan repayment, often ranging from six months to five years.
- Multiple Listing Service (MLS®): A system providing information about properties for sale to REALTORS®.
- Open Mortgage: A mortgage allowing penalty-free prepayment or renegotiation at any time.
- Partially Open Mortgage: A mortgage permitting partial prepayment under specific conditions.
- REALTOR®: Real estate professionals who are members of local and national real estate boards.
- Transfer Taxes: Payments to the government for property ownership transfer from seller to buyer.
- Vendor Take-Back Mortgage: When sellers finance part or all of a property’s mortgage to facilitate sale.
- Zoning Regulations: Municipal guidelines dictating permissible property usage.
Understanding these terms can significantly enhance your competence and confidence in the real estate market. Whether you’re buying, selling, or simply exploring, this knowledge is crucial in making informed decisions.
