BUYER’S GUIDE
1 INTRODUCTION
3 THE HOME BUYING PROCESS:
Initial Meeting
Secure Financing Wish List Your REALTOR ® Submit Your Offer
Negotiate Successfully
Closing Day
17 BUY OR SELL FIRST?
19 BUYING A NEW CONDO? DID YOU KNOW... 21 ABOUT SAGE 23 GLOSSARY
“Perry helped us with the purchase of our new home, and it was truly a pleasure to have her on our side! She has proven to be a thorough professional and does exactly what she says she will do—and then some... She really listened to our list of needs and wishes and then worked diligently as we progressed to our dream home. Each time we met, it was clear that Perry had done her homework and research about properties we were visiting. Her after-purchase service has also been exemplary! Perry has followed up with assistance on our home inspections, worked with us on communications with our vendors, and stays on task and on time with her service, advice, and caring for us as people. She is a highly recommended professional real estate agent.
We have already discussed future transactions that we are aiming for in the future!”
Rick & Lorraine - Cabbagetown
“You have been awesome throughout my whole first-home buying experience... I really felt that you were just as excited as I was... I liked working with you because I felt like you really knew the city and knew immediately the type of place I was looking for, which was great... You never wasted my time taking me to a building you knew I wouldn’t like... I would definitely refer my friends and family and already have...”
Rachelle – Queen West
“Until you sell a home, you are never really aware of the value a real estate agent can bring to the table.
The act of buying and selling can be an extremely stressful process at the best of times, so having a capable and confident agent makes a huge difference. Having an agent like Perry transformed our process into a pleasure.
Perry guided us every step of the way. She started by listening, then proceeded to develop a plan with us based on our expectations that combined our goals with Perry’s knowledge and expertise. The end result was a step-by-step strategy for success. Together with Perry, we sold our home for 26% over asking, and were able to leverage that incredible sale price against the purchase of a new home in our dream neighborhood.
Perry set herself apart from other agents by being responsive to our needs, by educating us with her understanding of trends, tactics, and the Toronto market, and by investing wholeheartedly in our happiness and satisfaction as clients. We consider ourselves incredibly fortunate to have been represented by Perry for the sale of our past and purchase of our present home.”
Peter and Sarah – Davisville Village
INTRODUCTION
While every financially significant investment poses risks, the Toronto real estate market offers incredible opportunities. Whether you are an experienced real estate investor with a sophisticated and diverse portfolio, or a first-time homebuyer contemplating the purchase of your first home, it’s important to educate yourself on the latest economic and real estate market trends, the basics of the home buying process, and to understand the unique local market trends impacting your neighbourhoods of interest. It’s also essential that you select a skilled and experienced real estate advisor to help you navigate the process.
Sage provides homebuyers with expert advice, accurate market and property information, prompt access to coveted properties, and the highest level of service and discretion. We offer skilled and authoritative assessments of real estate opportunities.
This home buyers’ guide provides a general overview of basic essentials you need to understand in order to navigate today’s real estate market.
ABOUT PERRY
With over two decades of experience in Toronto real estate, Perry Baria is known for her sharp market insight, expert negotiation skills, and unwavering commitment to client success. A full-time professional since 2003, she has built a reputation for delivering exceptional results, guiding buyers and sellers through seamless, strategic transactions.
Perry’s approach is deeply client-focused, with a long-term vision that extends beyond the transaction. She takes the time to understand her clients’ needs, ensuring their real estate decisions align with their lifestyle and financial goals. Her in-depth knowledge of Toronto’s diverse neighborhoodsspanning Riverdale, Leslieville, East York, downtown, and beyond-gives her clients a distinct advantage in a diverse and ever-changing Toronto market.
A lifelong Torontonian, Perry studied at McMaster University before returning to the city she has always called home. Her passion for travel has taken her across the globe-from Australia to India, Thailand to Italy-broadening her perspective and deepening her appreciation for architecture, culture, and design. An avid foodie, she loves discovering Toronto’s vibrant culinary scene and will happily engage in conversation about the city’s best restaurants, and hidden gems.
Clients describe Perry as professional, knowledgeable, a true negotiator, and a pleasure to work with. She is a trusted advocate in every transaction, known for her patience, integrity, and results-driven approach. More than just finding the perfect property, Perry ensures a seamless and stress-free experience, building relationships that last well beyond closing.
Me
perry@perrybaria.com 416-716-7073
THE HOME BUYING PROCESS
A BASIC OVERVIEW
Finding and purchasing a home involves the general steps outlined in the following section; however, most homebuyers and real estate investors have unique financial, property, and personal requirements that demand advice from a real estate advisor with specialized expertise. These include instances when you wish to purchase a:
• Home that is dependent on the sale of another property
• Vacation home
• Canadian property from overseas
• Property located outside of Canada
• Secondary or multiple investment property
• First home
STEP 1: INITIAL MEETING AND CONSULTATION
Finding and purchasing a home involves the general steps outlined in the following section; however, most homebuyers and real estate investors have unique financial, property, and personal requirements that demand advice from a real estate advisor with specialized expertise.
At our initial meeting, in addition to learning more about each and understanding how the real estate process works, we will also discuss current market conditions, market trends, and the benefits of working with a Realtor®.
STEP 2: SECURE FINANCING
Before starting your home search, it’s important to evaluate your financial situation, confirm your budget, familiarize yourself with mortgage options, and secure pre-approval from your lender. This will help you conduct your search with confidence and negotiate your desired home successfully.
ESTABLISH YOUR BUDGET
As a general guideline, total monthly housing costs for your primary home, including mortgage payments, taxes, maintenance fees, insurance, interest charges, and utilities, should not exceed 32% of your gross monthly household income.
Many financial advisors also suggest that total monthly debt, including mortgage payments, credit card, and car payments, should not exceed 40% of your gross monthly income.
Those purchasing a real estate investment property should consult their real estate and financial advisor to understand the tax and financial implications of their purchase.
CONFIRM DOWN PAYMENT
If your down payment amount is less than 20% of the total purchase price, you will need to purchase mortgage loan insurance that guarantees the debt against default. In most cases, this will be added to the mortgage loan.
CHECK YOUR CREDIT RATING
Your credit report plays an important role in your mortgage approval process and in determining the interest rate and other loan terms that a lender offers you. Before meeting with a potential lender, you may wish to confirm your credit rating so you have time to resolve any issues.
CONTACT
• TransUnion Canada: 1-800-663-9980
• Equifax Credit Information Services Canada: 1-800-465-7166
UNDERSTAND MORTGAGE BASICS
INTEREST RATES
Mortgage interest rates are fixed, variable, or adjustable:
• Fixed: A fixed mortgage interest rate is a locked-in rate that will not change for the term of the mortgage.
• Variable: A variable rate fluctuates based on market conditions, while the mortgage payment itself remains unchanged.
• Adjustable Mortgage Interest Rate: With an adjustable rate, both the interest rate and the mortgage payment change based on market conditions.
OPEN OR CLOSED MORTGAGE
Closed Mortgage: A closed mortgage cannot be paid off, in whole or in part, before the end of its term. It is a good option if you prefer a fixed monthly payment and wish to predict your expenses. However, closed mortgages often include penalties or restrictions for early payments, making them a poor choice if you anticipate moving before the term ends or if a decrease in interest rates is expected.
Open Mortgage: An open mortgage is flexible. You can typically pay off part or all of it at any time without penalty. This may be a good option if you plan to sell your home in the near future or if you intend to pay off a large portion of your mortgage. Most lenders allow open mortgages to be converted to closed mortgages at any time, though often for a small fee.
AMORTIZATION
Amortization is the length of time the entire mortgage debt will be repaid. Many mortgages are amortized over 25 years, but longer periods are available. The longer the amortization, the lower your scheduled mortgage payments, but the more interest you pay in the long run.
CONVENTIONAL VS. HIGH-RATIO MORTGAGES
Conventional Mortgage: A conventional mortgage is a mortgage loan that is equal to or less than 80% of the lending value of the property. The lending value is the property’s purchase price or market value— whichever is less. For a conventional mortgage, the down payment is at least 20% of the purchase price or market value.
High-Ratio Mortgage: If your down payment is less than 20% of the home price, you will typically need a high-ratio mortgage. A high-ratio mortgage usually requires mortgage loan insurance. CMHC is a major provider of mortgage loan insurance. Your lender may add the mortgage loan insurance premium to your mortgage or ask you to pay it in full upon closing.
MORTGAGE TERM
The mortgage term is the length of time that the mortgage contract conditions, including the interest rate, are fixed. The term can range from six months to ten years.
There are generally several term options for a mortgage, and it’s important to weigh the benefits and costs of each. A longer-term (five years, for example) may allow you to plan ahead and protect you from interest rate increases, but it may not offer you flexibility should interest rates fall.
OPTIMIZING YOUR MORTGAGE
Work with your lender to optimize your mortgage payment schedule for your unique situation. Many primary homeowners aim to pay off their mortgages as quickly as possible, which can be achieved with more frequent installments. Your mortgage may also be structured to allow an increase in payments as cash flow permits, and there may be anniversary lump sum payment opportunities each year to be applied directly to the principal.
If you are purchasing real estate solely for investment purposes, other considerations, such as tax implications, come into play. Consult your real estate and financial advisor for assistance.
GET WRITTEN PRE-APPROVAL
In markets where there is high demand and a low volume of the type of home you wish to purchase, written pre-approval is essential and will give you the competitive edge in securing your desired home. For example, in a scenario where a seller receives two similar offers, one accompanied by a letter that confirms financing pre-approval, and another without supporting documents, the former offer is frequently considered first.
STEP 3: WISH LIST
Whether purchasing a house or condo, buyers generally have an objective to find a home in a neighbourhood that will meet their needs for the next 5-10 years. My objective is to better understand your vision and ask pointed questions to drill down on your needs, wants, and “must-haves”.
PURCHASING A CONDO?
Here are a few things to think about:
• Square footage
• Size of building
• Types of amenities
• Exposure
• Proximity to transit
• Is this for investment or will you be living there?
• What is your timeline?
PURCHASING A HOUSE?
Here are a few things to consider:
• Location
• Do you prefer semi-detached or detached?
• What school district does it fall into?
• How many bathrooms?
• Is there parking?
• Do you want outdoor space?
• What are your top three priorities for this home?
• Is this your “Forever Home”?
• If not, what is your timeline?
These are just a few discussion items for our first meeting. However, as we start viewing homes and condos, other considerations will become more apparent. As we move through the home selection process, we’ll start to narrow down what is important to you, and your needs and wants will become distinct.
You’ll know when you’ve found the right property. Then, it’s up to me to negotiate the best price and terms to make sure you get it!
STEP 4: YOUR REALTOR ®
A Realtor ® represents your interests when purchasing a home, one of the most significant financial investments you can make. For this reason, it’s essential to select an advisor with in-depth knowledge of your local real estate market and specialized experience in the property types you are interested in.
LOCAL EXPERTISE
Our associates offer in-depth knowledge of your local real estate market, from advice on homes and developments with the best potential return-on-investment, to insight into the properties and neighbourhoods that best match your life stage and lifestyle.
REAL ESTATE SPECIALIZATION
We assist clients in the purchase of real estate in more than a dozen real estate categories, including:
• Single-family homes
• Condos and townhomes
• Multiplexes
• Waterfront properties
• Luxury real estate
PROFESSIONAL SERVICE AND DISCRETION
We commit to providing you with confidential, knowledgeable, and responsive service. We guarantee discretion, monitor, and promptly deliver listings that meet your criteria, facilitate viewings and property tours according to your individual needs and schedule, and facilitate the negotiation and purchase of your home professionally.
SEAMLESS SALES & MARKETING
If buying a home depends on the sale of your current one, we make the process efficient and seamless. Our real estate marketing program reaches the most targeted and qualified buyers through exclusive international, national, and local publications, as well as online marketing.
STEP 5: SUBMIT YOUR OFFER
It’s important that you sit down with your agent or lawyer to prepare your offer. Real estate laws vary widely from region to region, and it’s essential that you protect your legal interests and account for any specific contractual contingencies that are unique to your area and desired property. Some general considerations include:
LEGAL AND CONTRACTUAL OBLIGATIONS
In Canada, an offer commits you to legal and contractual obligations as soon as the other party has accepted it. Prior to submitting an offer, ensure you are clear on the legal obligations you are undertaking, should the offer be accepted.
VALUATION
Prior to writing your offer, your SAGE associate can provide you with information on recent area sales, local market information, and background on whether there are competitive bids.
This will help you determine:
• Your initial offer
• Your target price for this specific home
BACKGROUND RESEARCH
With some investigation, your associate may also be able to assess your seller’s background and objectives for selling, which may assist you in crafting a competitive offer.
OFFER DETAILS
The details of an offer typically include:
• Your legal name and that of the vendor
• The legal civic address of the property
• The price you are offering to pay
• Inclusions (items in or around the home that you think are included in the sale should be specifically stated in your offer, such as appliances, lighting fixtures, or window coverings)
• Amount of your deposit
• Dates you take legal and physical possession of the home
• Legal “subjects” or “conditions” upon which the contract becomes final (such as satisfactory home inspection report or financing approval)
• The date the offer expires
• Your offer is a legally binding document and should be prepared by a real estate professional or lawyer.
PROFESSIONAL INSPECTION
Your Realtor ® can advise you as to whether a professional inspection should be conducted prior to or after submitting your offer.
This will depend on:
• The property age and type
• Whether competitive bids are anticipated
TIME FRAME
Ensure that any time frames indicated in your contract are realistic, particularly if your offer is still subject to securing a mortgage loan.
STEP 6: NEGOTIATE SUCCESSFULLY
PREPARATION
After submitting an offer, you should be prepared to negotiate, not just on the initial price, but on all key factors impacting the sale of the home, including:
• Deposit
• Inclusions
• Dates for completion and possession
• Deadlines for subject removals
Ensure you know your budget and requirements prior to submitting your offer, so you don’t commit to additional costs in the heat of the process.
MULTIPLE OFFERS
In high-demand, low-inventory areas, you may find yourself bidding against other buyers.
Some sellers in high-demand niche markets may also intentionally list their home at a low price hoping to stimulate multiple offers.
• This doesn’t necessarily mean that the price will be bid up significantly over the asking price.
• However, it does mean that due diligence is required on your part and your Realtor® to ensure the offer you submit is strategic, competitive, and reflective of what you are ultimately willing to pay for the property.
Whether you are anticipating competition or not, you should be pre-approved for your mortgage prior to your home search and well in advance of writing an offer.
In a multiple offer situation, this will impact your ability to negotiate successfully, particularly if others making an offer are already pre-approved.
POTENTIAL RESPONSES
You can expect one of three responses to your offer:
Accepted as is: The deal is complete, and once signed by the seller, the offer becomes a binding legal contract.
Counter offer: The seller may make changes to your offer, such as:
• Adjustments to the price
• Changes to the closing date
• Modifications to conditions
Or you may accept the counter offer and close the deal by signing the document. Or, you may make another counter offer back to the seller.
Rejection of the offer: The seller may choose to reject the offer, and the sale will not go through.
OFFER ACCEPTANCE
Once both parties come to an agreement, Negotiations conclude and you move on to the next steps in the buying process. You will have a set period of time in which to satisfy the legal conditions agreed to in your contract, such as:
• Completing a satisfactory home inspection report
• Securing financing
Only after your conditions are removed do you have a legally binding document.
STEP 7: CLOSING DAY
The closing or completion day is the day you take legal possession of your new property.
PREPARATION
As this day nears, your Realtor® and lender will monitor the progress of your transaction to ensure there are no last-minute issues that need to be dealt with.
COMPLETION (CLOSING) DAY
On completion day, legal property ownership is transferred to your name.
• The mortgage amount is provided to your lawyer or notary by your lender.
• You will receive a Statement of Adjustments with costs payable, including:
• Balance owing
• Legal fees
• Property transfer taxes
• Other completion costs
Your lawyer or notary will:
• Pay the seller
• Complete necessary documents
• Register your home at the Land Titles Office in your name
ON YOUR CLOSING DAY:
• Your lender provides the mortgage money to your lawyer/notary
• You provide the down payment (minus your deposit) to your lawyer/notary
• You pay the remaining closing costs
• Your lawyer/notary pays the vendor
• The home is registered in your name
• You receive the deed to your new home
BUY OR SELL FIRST?
BUY FIRST
UPSIDE
• Get the house you want
• Know where you’re moving to
• Avoid a double move
DOWNSIDE
• Owning two homes = two mortgages
• Feeling pressured to take less money for your existing home because you’ve already bought another
• Bridge Financing – If you haven’t closed on your existing home and need to take possession of your new home, you will have to spend money to bridge finance until your existing home closes
• If you knew the price your home would sell for, you could have purchased a little more home if you wanted to
SELL FIRST
UPSIDE
• You’re in the driver’s seat
• You can ask for a longer closing to give time to find your dream home
• You have certainty about how much money you have in hand for your next purchase
DOWNSIDE
• You can’t find a home that’s suitable before your existing home closes
• You have to move into a short-term rental or with relatives
• In a fast upward-moving market, multiple offers mean you may not get the first home you offer on
BUYING A NEW CONDO? DID YOU KNOW...
1. There are 5 different types of condominiums:
• Standard
• Vacant Land
• Common Element
• Leasehold
• Phased
WHAT IS THE DIFFERENCE, AND WHICH ARE YOU BUYING?
2. What kind of parking and locker is available? (e.g. owned, exclusive-use common element, leased, or licensed)
3. Who picks the specific parking spot and locker? Purchaser or developer?
4. Is the condo covered under the TARION Warranty Program?
5. What is included in the price? (e.g. specifications, taxes)
6. Is Harmonized Sales Tax included in the purchase price?
• If so, is HST net of rebates?
• If not, what are the implications?
• Who is entitled to the rebate?
• Does the purchaser qualify for the rebate?
7. Leased items (e.g. Heating and air conditioning units, hot water tank)
• What are the lease terms?
• Security deposits, payments, terms, buyout provisions
8 . At what stage is the condo approval process?
9. Developer’s rights to early termination?
10. Occupancy closing date
• Is it a tentative occupancy date or a firm occupancy date?
• What is the outside occupancy date?
1 1. Buyer upgrades
• How are upgrades paid for?
• What happens if the upgrades are not installed?
1 2. Alteration of plans, specifications, and materials?
1 3. Area of unit?
• Does the developer agree to a minimum square footage?
• How is the area measured? (Does it include the balcony?)
• What is the permitted variance in size?
1 4. What is included in common elements?
1 5. What is the permitted use? (Single-family residential, short-term lease provision?)
1 6. What remedies does a buyer have in the event of a developer’s default?
1 7. What will the monthly occupancy fee be?
ADDITIONAL COSTS THAT BUYER MUST HAVE TO PAY INCLUDE:
• TARION enrollment fee
• Utility metres
• Utility connection charges
• Development charges
• Tree planting
• Park levies
• Cost of status certificate
• LSUC transaction levy (Law Society of Upper Canada)
• Developer’s lawyer’s legal fees for administering deposits
• Developer’s lawyer’s legal fees for obtaining partial discharges of mortgages
• 2 months estimated common expenses as a reserve fund contribution
WE SET A HIGH BAR ABOUT SAGE
If there’s one word that sums up Sage, it’s uncompromising. Uncompromising is our way of making sure that every real estate experience isn’t just good, it’s great.
We set a high bar for ourselves, and our Realtors ® Our clients deserve the very best of us, from the services and counsel we provide to the quality of our marketing materials, and we’re relentless in making sure they get it.
As a family-run company, we have an unusual combination of deep industry expertise –literally decades of experience – and a fresh, progressive approach.
We never stop thinking about how we can improve what we do so that we can deliver more value to our clients and Realtors ® .
THE MARKET DOESN’T STAY STILL. NEITHER DO WE.
We monitor, respond and adapt quickly but strategically, keeping an eye out for ideas that will help everyone stay ahead of the market.
ON THE GROUND AND HANDS ON.
Our Realtors ® are our partners. We work side by side with them, providing industry-leading knowledge, training and expertise.
They’re supported by one of the most advanced, comprehensive marketing systems in the industry, an in-house creative team that’s second to none and a management team that’s one of the most respected in the business.
SMARTER. FASTER.
This uncompromising level of support ensures that sellers’ homes are positioned in the most favourable light and receive maximum exposure in the marketplace locally, nationally and internationally.
Buyers gain valuable knowledge about neighbourhoods and market trends that they can put into action to make informed buying decisions.
WE STAND BY OUR WORD.
We insist on the highest standards of integrity in everything we do, hand-selecting Realtors ® who believe, as we do, in doing what’s right and fair for our clients.
When it comes to making sure that they consistently get the best of us, we never compromise.
GLOSSARY
Adjustable Rate Mortgage (A.R.M)
Mortgage with a rate that is variable. It is usually tied to the prime rate.
Agency
Relationship a buyer or seller has with a real estate brokerage company.
Agreement Of Purchase and Sale (AKA Offer)
Legal document that outlines the terms of a Toronto real estate deal that will be signed by both the buyer and the seller.
Amortization
Mortgage payment that includes both principal and interest.
Amortization Period
How long it will take to repay the mortgage.
Appraised Value
Amount that a professional appraiser thinks what a Toronto property is worth. This is usually done to get the value of the house for mortgage purposes.
Assessed Value
Amount at which a property is valued for taxation purposes.
Assumable Mortgage
Mortgage that can be passed on from the seller to the buyer, should the buyer want the mortgage and qualify.
Blended Mortgage
Combination of two separate mortgages.
Balloon Payment
One-time payment against the principal paid at the end of certain mortgages.
Bridge Financing
Loan that covers a borrower in-between the purchase of their new Toronto home and the sale of their existing Toronto home.
Canada Mortgage and Housing Corporation (CMHC)
Institution whose primary purpose is to administer the National Housing Act and provide lenders with insurance against high ratio mortgages.
Cap
Maximum amount an interest rate can change.
Chattels
Contents of the home belonging to the owner which are not included in the sale of a home unless specifically outlined in the offer.
Clear Title
A Toronto property that has no claims against it.
Closed Mortgages
Mortgage that cannot be paid out until the end of the mortgage period. Sometimes exceptions are made, but usually there will be a penalty charged.
Closing Date
Date that the house actually exchanges hands from the seller to the buyer. The Toronto buyer gets the keys and the Toronto seller gets their money.
Cloud on Title
When a claim has been made against the title of a Toronto property. Typically, it impacts the value of the property.
Collateral
Tangible asset that is used as a guarantee of payment in a loan. A house acts as the collateral in the mortgage.
Commitment
Written agreement that a lender will provide a specified amount of funds under certain conditions.
Common Elements
Parts of a condo building that are owned by all owners of the building, ie. walkways, elevators, halls, recreation facilities, etc.
Condition
Clause written into the offer which outlines something that has to happen before the agreement becomes binding. Should the condition not be met, the negatively affected party has the option to terminate the transaction.
Conditional Offer
Offer that has one or more contingencies that must be fulfilled in order for the agreement to become firm and binding upon both parties.
Condominium
Form of ownership where the owner has the title to a specific unit and a portion of the common elements of a building.
Conventional Mortgage
Mortgage from a traditional lender such as a bank where the value of the mortgage does not exceed 75% of the value of the Toronto property. Any mortgage greater than 75% is considered high ratio and must be insured by CMHC.
Cooperative
Type of ownership wherein the building is owned by a company. In order to be entitled to live in the building you must buy shares. It is typically difficult to get a mortgage for a co-op without a large down payment and you must also be approved by the Co-op Board of Directors.
Deed
Document that officially transfers ownership of a Toronto property.
Default
When a borrower is not able to make a debt payment.
Deposit
Money that is put down after an offer has been accepted and is held in trust, usually, by the listing real estate brokerage.
Disbursements
Various expenses and costs that a lawyer will pay on behalf of a Buyer to close the sale.
Discharge
When a mortgage has been paid in full and the title has been changed to reflect that.
Discount Points
Fee that is charged when a mortgage interest rate is reduced from the current rate. One point equals one percent of the mortgage value.
Down Payment
Amount that the buyer puts down on the property in cash: this is the difference between the purchase price and the mortgage amount.
Dual Agency
(See Multiple Representation)
Easement
Legal right to use someone else’s land for a specified purpose. This right is tied to the land, not the individual, so it passes from the seller to the buyer.
Encroachment
Occurs when the boundaries of some part of one property impede over the boundaries of its neighbouring property.
Equity
Value of the property minus any outstanding debt.
Fiduciary Duty
Legal relationship between a buyer or seller and their REALTOR ®
First Mortgage
First mortgage on a property. It has the first claim on the property should there be a default.
Fixed Rate Mortgage
Mortgage that has a fixed amount of interest paid over a specific amount of time.
Foreclose
When the lender takes legal ownership over a property due to the borrower defaulting on the loan.
Gross Debt Service Ratio (G.D.S)
G.D.S is typically used as the indicator that tells you if you can afford a certain mortgage payment. All costs associated with housing (mortgage, taxes, heating, and 50% of condominium fees, if applicable) should not exceed 32% of your gross annual income (income before tax).
High Ratio Mortgages
Mortgage that exceeds 75%. Must be insured by the CMHC.
Hold Back
When money is held back by the lender until a condition is satisfied.
Homeowner’s Insurance
Protects homeowners against damage to their home caused by fire, smoke, wind, hail, vandalism and slips/falls.
Home Inspection
Objective evaluation of a house by a home inspector. At the end of the evaluation a detailed document is provided outlining the condition of the house.
Home Warranty Plan
Insures against the failure of the operating systems of the home. It may cover things such as the heating system, central air, electrical, plumbing, and large appliances.
Interest Adjustment
Portion of interest that is paid if the closing date of the transaction does not coincide with the mortgage payment date. For example: if mortgage payments are made on the 15th of the month but the sale closes on the 10th, there will be an interest adjustment for 5 days.
Interest-Only Mortgage
The interest is paid on a regular basis and the principal is paid at the end of the term.
Irrevocable Period
The period at the end of which an offer expires.
Joint Tenancy
Situation where two people share an equal ownership share of a property. If one dies, their share is transferred to the remaining person instead of to the beneficiaries of the estate of the deceased.
Land Transfer Tax
Tax paid to transfer a property.
Leasehold Mortgage
Home mortgage when the house is on leased land.
Legal Fees
Amount charged by lawyer to execute the purchase or sale of a property. Liabilities
Debts.
Lien
Legal claim against real estate to guarantee payment of a debt.
Listing Agreement
Formal agreement between the seller of a property and a real estate brokerage company authorizing the brokerage to offer a particular piece of real estate for sale.
Listing Broker
The real estate brokerage company that represents the seller.
Loan Commitment
Document that demonstrates a lender is willing to lend a certain amount of money with certain conditions to a borrower.
Lock-In
Occurs when a buyer tells the lender that they accept a certain interest rate for a certain amount of time.
Maintenance Fee
Amount of money a condo owner pays each month towards upkeep on the common areas of the building.
Maturity Date
End date of a mortgage.
Mortgage
An agreement between a lender and borrower where the borrower puts up a piece of real estate as collateral for a loan to purchase that property.
Mortgage Broker
A professional who brings together borrowers and lenders. Usually their fee is paid by the lending institution.
Mortgage Insurance
Also referred to as mortgage loan insurance or mortgage default insurance, this is offered through CMHC and covers the lender when a borrower has less than 20% down payment. Currently in Canada there are three major such insurers: CMHC, Canada Guaranty, and Genworth.
Mortgage Life Insurance
Mortgage life insurance covers the mortgage value in the event of the death of the mortgage holder.
Mortgagee Lender.
Mortgagor Borrower.
Multiple Representation
Occurs when a brokerage represents more than one client in a single transaction. For example, the buying client of one Sage Real Estate Realtor® buys a property that has also been listed with Sage Real Estate.
Open Mortgage
Type of mortgage where the borrower can pay the debt at any time.
Origination Fee
Fee the lender receives for processing a loan application.
Penalty
Amount of money paid to the lender so that the borrower can prepay a portion of the mortgage.
PIT
Principle, interest and taxes.
PITH
Principal, interest, taxes, and heating.
Possession
Control (ownership) of a property.
Power of Attorney
A legal agreement wherein one individual grants another the legal authorization to represent them and make decisions on their behalf.
Pre-Approval For A Mortgage
A written commitment from a lending institution to lend a potential buyer a certain amount of money at specific terms for the purchase of a property.
Pre-Payment Privilege
The right of a borrower to prepay some of the principal without having to pay a penalty.
Principal
This is the base amount of money borrowed.
Real Estate Agent (Broker)
The brokerage company that represents either a buyer or seller in the process of buying or selling real estate.
Realtor ®
A registered real estate sales representative or broker.
Refinance
When a new mortgage is obtained and used to pay off the old mortgage.
Renewal Agreement
An agreement to extend the mortgage for another term once the initial term is reached.
Reserve Fund
Bank account established by a condo corporation to cover major repairs to the common elements. The fund is paid into from a portion of the monthly maintenance fee.
Seller Take-Back
Mortgage where the seller personally provides some of the financing for the buyer.
Setback
The distance back from the property line beyond which you must get approval for any improvements.
Statement of Adjustments
Amount of money owed at the time of closing. The amount will be calculated by a lawyer and the adjustment will typically be the difference between the deposit and down payment subject to various credits and debits.
Selling Broker/Cooperating Broker
The Realtor® who represents the Buyer in an Agreement of Purchase and Sale.
Special Assessment
Special charge a condo owner has to pay for a capital improvement or unforeseen expense.
Status Certificate
Document that outlines the financial and legal status of a condo corporation.
Sub-agent
An agent who finds the buyer for a property but has a fiduciary responsibility to the seller.
Survey
Document that outlines the property line on a piece of real estate as well as the location of any fences and buildings on the property.
Tenancy in Common
When a property is jointly owned by a group of individuals, not necessarily in equal shares, and each owner has the right to sell their portion.
Term
Amount of time a lender lends funds to a borrower.
Title
Legal certificate outlining who owns a property.
Title Insurance
Insurance that covers a piece of land. This provides assurance that the real property remains the property of the buyer if a claim against the property is processed.
Title Search
The process of checking records to ensure the seller has the legal right to sell the property.
Total Debt Service Ratio (T.D.S)
T.D.S. is typically used as the indicator that tells you if you can afford to take on more debt. Your TDS should not exceed 40% of your gross annual income (income before tax). This includes any mortgage debt, car loans, etc.
Trust Account
Bank account used by brokers to keep deposit funds separate from other funds.
Trust In Real Estate Services Act, 2020 (TRESA).
A replacement of the Real Estate and Business Brokers Act (REEBA). It is legislation that governs how Real Estate Professionals are to transact business in Ontario with increased consumer education, protection and transparency.
Underwriting
Calculation of risk involved for a lender.
Variable Rate Mortgage
Mortgage that has fixed payments but where the interest rate is adjusted to market levels. If rates go up, a larger portion of that month payment goes to interest but the actual amount of the payment does not change.
Waiver
Document normally signed by the buyer which relieves the seller from obligation to a particular condition in an offer.
Warranty
Legally binding commitment that the seller provides to the buyer to guarantee that the house is in good condition.
Zoning Regulations
Criteria that regulates how a property may be used, typically established by the municipality. A property could be zoned for many different uses including residential or commercial.