Adjustable Rate Mortgage  

Also known as variable rate or ARM. An ARM is a mortgage with interest rates that may fluctuate up or down periodically, according to the index upon which it is based. Most ARM's will have a limit on the amount that the rate can vary.

Annual Percentage Rate  

The true rate of interest, stated as a yearly percentage, for a loan over its projected life.


An official estimate of value of an asset as determined by a qualified, independent party. Appraisal of property is typically based on facts such as recent sales of comparable properties, replacement cost, and ability to produce income.


Increase in value of a property, not including increases from improvements.


Adjustable Rate Mortgage.

As-is Agreement  

An agreement in which a property is sold without warranty in whatever condition it is in at the time the contract is signed.

Assessed Value  

The value placed on land and buildings by a government agency for tax purposes.


Tax or charge levied against a property by the government, typically to pay for local improvement, e.g. sidewalks, curbs, sewers, etc.


What the borrower owns. This could include real estate, savings, vehicles, RRSPs, GICs, stocks, bonds, household goods, etc

Assignment Clause  

A sales contract with an assignment clause allows the buyer to transfer the interest in the property (e.g. the right to buy it at the given rates and terms) to another party.


The process of taking over the existing mortgage and assuming liability for the payments when purchasing a property. If the purchaser defaults, both buyer and seller are responsible for repaying the debt.

Back Ratio  

Ratio of monthly housing costs (principal, insurance, taxes, and interest) plus regular monthly payments to gross monthly income used by lender to evaluate an applicant's qualification for a loan. Lenders will typically allow a back ratio between 32 and 45 percent.

Balloon Payment  

Final payment on a mortgage that is larger than preceding payments and pays the loan in full.


A legal proceeding, which offers protection from creditors to a debtor who is unable to pay debts.

Book Value  

The value of an asset as shown in the financial records of an individual or corporation.


Failure to perform on a promise made in contract without legal excuse.

Building Codes  

Provincial or locally adopted regulations that control the design, construction, repair, quality of building materials, use, and occupancy of any structure under its jurisdiction.

Buy & Sell  

NL Buy Sell Magazine. The Buy & Sell Magazine distributes 15,000 free copies weekly throughout Newfoundland, so your listing will get plenty of exposure! Real Estate listings are shown at the beginning of the book.

Buy-back Agreement  

An agreement specifying conditions under which the seller agrees to repurchase the property, usually for a stated price and within a stated time limit.

Buyer's Market  

A market in which there are more houses for sale than there are potential buyers. As such, housing prices are driven lower, and buyers stand to get a better deal when purchasing.

C. M. H. C. Insurance  

If your down payment is less than 25%, you must have mortgage insurance. It insures the lender against the possibility of you defaulting on your mortgage. Canada Mortgage and Housing Corporation is the principal source of mortgage insurance. G.E. Capital also provides mortgage insurance to many of Canada's financial institutions.


Canada Mortgage and Housing Corporation, a Crown Corporation that administers the National Housing Act.

Certificate Of Occupancy  

A certificate stating that a building is approved for occupancy issued by the city or county building inspection department. It is important that a certificate has been issued, as some home insurance policies will not pay claims for damage to a property that has not been approved for occupancy.

Closed Mortgage  

The restriction or denial of repayment rights until the end of the mortgage term.


Also referred to as settlement. The process of finalizing all dealings in the purchase of a property, including singing of papers, disbursement of money, preparation of deed, and transfer of ownership

Closing Costs  

Costs associated with finalizing the purchase of a home or property, including property insurance, property taxes, title insurance, mortgage insurance premium, points, and filing fees.

Cloud On Title  

An invalid legal claim to the title of a property that appears during the sale of the property, due to a recording mistake or other error and thus not apparent to the buyer or seller beforehand.


The state of two or more people sharing ownership of a property. Can be an important issue in matters such as personal liability or inheritance.


A person who assumes joint liability with another person by signing documents (e.g. loan promissory note). A co-signer is not necessarily a co-owner.


Personal property pledged as security for a debt. Collateral for a mortgage is usually the property itself.


The payment given by the seller of a property to a Real Estate agent for his/her services. The amount is usually a percentage of the sale price and is usually paid at closing.

Commitment Letter  

A letter outlining the amount, terms and conditions under which a lender is willing to offer a mortgage.

Common Areas  

Lands or improvements on land that are designated for common use and enjoyment by all occupants, tenants or owners. The lobby, a pool, tennis court or common hallways would all be Common Areas in a condominium or townhouse complex.

Common Tenancy  

The ownership of property by two or more persons, where on the death of one, his share does not automatically go to the other(s) but is credited to his estate.

Comparative Market Analysis  

A comparison a sale prices of similar properties in a given area for the purpose of determining the fair market value of a property.

Compound Interest  

Interest charged on both the principal amount of a loan as well as on the interest charged in a proceeding period.


A provision that makes the occurrence of one event dependent on the completion of another. For example, the purchase of a home may be contingent on the seller repairing the structural damages.

Contract Of Purchase And Sale  

A written statement by which a buyer agrees to purchase, and a seller agrees to sell a particular piece of property according to the terms set forth in that agreement.

Conventional Loan  

Real estate loan that is not guaranteed by a government agency such as the Veterans Administration or Federal Housing Authority.

Conventional Mortgage  

A first mortgage granted by an institutional lender such as a bank or trust company, where the amount of the loan does not exceed 75% of the lending value of the property.

Convertible Mortgage  

A short-term mortgage, usually 6 months or 1 year, that allows a borrower to lock in to a longer term at any time without penalty.


Transfer of ownership of real estate property from one individual to another.

Counter Offer  

A rejection of an original offer, combined with a new offer stating different terms and conditions.

Credit Bureau Report  

A report by a credit reporting agency that maintains a history of timely, or untimely, repayment of debt. The lender's primary source of information regarding the credit history of a borrower

Credit Report  

A report from an independent source outlining the credit history of an individual, including current and previous debts, payment amounts, late payments and past due amounts, defaults, and other related information on every credit source the individual has used.


A written, sealed document which transfers title to real estate from one party to another

Deed Of Conveyance  

This is the actual deed wherein the property is conveyed from the vendor to the purchaser for the specified amount of the purchase price of the property. The deed of conveyance will also contain the necessary affidavits and warranties required to be given by a vendor to a purchaser.


Failure to meet certain contractual obligations, such as mortgage payments. Default can lead to foreclosure.


A sum of money that is required to be paid with an offer to purchase as a symbol of the purchaser’s commitment.

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Disbursements are all fees required by your lawyer to complete the purchase or sale of your property. If you are purchasing a property, standard disbursements will be costs for title searches, sheriff searches, compliance letters, registration costs etc. If you are selling a property standard disbursements will be costs for obtaining releases of any mortgages against your property, payment of any property or water taxes owing on the property, tax certificates and surveys, etc. Be sure to get a full breakdown of all disbursements from your lawyer.


Statement of fact(s) concerning the condition of the property for sale and the surrounding area. In most states, the buyer is protected by disclosure laws requiring sellers to divulge certain information about the property, e.g. if the property is in a special studies zone.


The option to make twice the normal regular payment at a regular payment due date.

Down Payment  

The amount of cash put forward by the buyer toward the purchase price of real estate.

Easement Rights  

The rights of an individual to use another individual's property for a particular purpose (e.g. access to their own property). The seller should make the buyer aware of any easement rights that affect the property for sale.


Any claim against the title to a property, such as a lien or mortgage.


The difference between the value of a property and the amount of financing on that property.

Fixed Rate Mortgage  

The interest rate remains the same for the term of the mortgage.


An item that is attached to the property, e.g. a dishwasher or air conditioner, and usually sold with it.


Court action taken by a mortgagee when a borrower has defaulted.

Free And Clear Title  

Title to a property, which is free from any mortgage, lien, or other encumbrance.

Freely Assumable  

Term used to describe a loan, which may be assumed by anyone without permission from the lender. In such a situation, however, the original borrower is usually held liable in the event the loan is not repaid.

Grace Period  

The time period between the due date of a mortgage payment and the date when late charges are assessed. For example, payments due on the first of the month may have a 14 day grace period, meaning that fees will be charged if payment is not received by the fifteenth.

Graduated Payment Mortgage  

A mortgage with monthly payments that are smaller at the beginning of the loan period and gradually increase by a specified amount for the first five or ten years, after which they become fixed. A GPM has a fixed interest rate and fixed loan period.

Gross Dept Service Ratio  

The percentage of annual gross income of the mortgagor that is required to maintain annual mortgage payments, property taxes and hydro.

Guaranteed Mortgage  

A mortgage that is guaranteed against default, such as a VA or FHA insured mortgage. Borrowers must pay an insurance premium in order to get a guaranteed mortgage (also called an insured mortgage).

Hazard Insurance  

Insurance that covers events such as earthquakes, floods, tornadoes, and other "acts of God".

High Ratio Mortgage  

A mortgage loan that exceeds the normal limit of 75% LTV (loan to value) of a conventional mortgage. Typically made possible by a mortgage insurance plan, e.g. CMHC or GE Capital.

Home Inspection  

Home inspections are a tool used by purchasers to ascertain the structural and overall condition of the property. The purchaser will usually include a clause in their offer to purchase that the offer is subject to completion of a satisfactory home inspection by a certified home appraiser. This inspection is usually completed at the purchasers cost and will then establish if there are any problems with the home that should be dealt with immediately.

Home Owner's Insurance  

Property insurance that protects homeowners against theft, personal liability, and fire.

Home Warranty Insurance  

Private insurance for home buyers that covers appliances and plumbing, heating, and electrical systems in the home.


A market indicator used to determine the interest rate for an adjustable rate mortgage. Common indexes include one-year treasury securities and the 11th District Cost of Funds.


An examination of a property or building to determine condition or quality for a particular purpose such as an assessment of structural or termite damage.

Inter Alia Mortgage  

"Inter Alia" is Latin for "Amongst other things". An Inter Alia Mortgage is a mortgage that is secured by more than one property. A single mortgage document is executed and registered against each property that is used as security.


The price paid to rent money. The rate of interest over a period of time for a specific amount of money, usually expressed as a percentage.

Interest Adjustment Date  

The date on which the mortgage really begins, usually the first of the month. The interest owed for the number of days between the closing date and the last day of the month is paid on the closing date by cheque or by deduction from the mortgage advance and covers.

Interest Cap  

A limit on the amount that the interest rate for an adjustable rate mortgage can change, regardless of how much the index changes. Most ARMs have cap on both the amount it can increase or decrease at any periodic adjustment interval and a life-long cap that limits the amount the interest rate can vary over the life of the loan. The two interest caps are sometimes called a "periodic cap" and a "life cap".

Interest Rate  

The percentage rate on a principal amount charged by a lender for the use of a sum of money.

Joint Tenancy  

Property held by two or more persons with an undivided interest. If one owner dies, the property passes automatically to the other(s).

Junior Lien  

When a property is foreclosed, lenders are repaid in a particular order, established by the loan documents. The lender with the first claim to repayment is said to hold the first mortgage, and a lender whose repayment order is after the first claimant is said to hold a junior lien.

Junior Mortgage  

Also called a secondary mortgage. A mortgage whose claim to repayment is second to another mortgage.

Lease To Purchase Option  

Buying a piece of property by renting for a specified period, usually one year, with the provision that you will purchase the property at the end of that period for a predetermined sale price.

Legal Fees  

Legal fees are the fees that your lawyer will charge you for acting on your behalf with regard to the sale of purchase of your home. Legal fees will not include any disbursements required to complete your transaction. Obtain a full quote for all fees and disbursements from your lawyer.


Outstanding debts of an individual. Mortgages, loans, credit card balances.


A charge registered against a property.

Liquidated Damages  

Compensation paid to the seller if the buyer fails to complete the purchase even though all contingencies have been satisfied. For example, the seller may keep the buyer's earnest money in the event the buyer defaults on the contract.

Loan Application  

A document containing detailed information about the borrower and co-borrower that is required for a loan to be issued.

Loan To Value  

The ratio between the mortgage loan amount and the value of the property usually expressed as a percentage, i.e. 75% LTV. The value of the property for lending purposes is the purchase price or appraised value, whichever is lower.

Loan-to-value Ratio  

Abbreviated as LTV. The ratio of a proposed loan amount to the lesser of a property's appraised value or purchase price. For example, if a property is purchased for $110,000, appraised for $100,000 and the buyer is applying for a loan in the amount of $90,000, the LTV is 90% (90,000 divided by 100,000).


An assurance of a given interest rate at the time of settlement. For example, if the interest rate is at 7.5% when you apply for a loan, it may have risen (or fallen) by the time the loan is approved. A lock-in ensures that you will get the original interest rate. Some lenders charge a fee for locking in an interest rate.


Loan-to-value ratio.

Lump Sum Payment  

A sum of money paid at one time, as opposed to spreading payments over a period of time.


Any repairs or general upkeep done to preserve the present condition of a property.


A percentage added to an adjustable rate mortgage's index to determine the interest rate at a given time. For example, if an ARM has an index of 4% and a margin of 2.75, the interest rate is set at 6.75% (4 + 2.75).

Market Value  

The value of a property based on what the market will bear. Determined by a comparison of the subject property to others in a similar area that has sold recently.


Money Back Guarantee. View Terms & Conditions


A conveyance of property to a creditor, as security for payment of a debt, redeemable on the payment or discharge of the debt at a specified date.

Mortgage Broker  

Trained professionals with a wealth of knowledge and experience to find the mortgage that best suits your needs, at the best rate available, from a large selection of lenders that include most major banks, trust companies, and credit unions. A mortgage broker works for you, not for the lender. Many financial institutions pay finders fees to mortgage brokers who refer business to them making it possible for you to get the best mortgage product at no cost to you.


The lender of mortgage funds.


The borrower of mortgage funds.


Discussions held between two or more parties for the purpose of resolving issues and reaching an agreement.

Net Worth  

The value of ones assets minus their liabilities.

Open Mortgage  

A mortgage, which allows for extra payments, principal reductions or full payment at anytime without penalty.

Payment Cap  

A limit on the amount that the monthly payment on an adjustable rate mortgage can increase or decrease at each adjustment period. For example, if your monthly payments start at $1,000 and the ARM has a payment cap of 7.5%, the next adjustment cannot exceed plus or minus $75 per month regardless of how much the loan's index changes. This can lead to negative amortization if the interest rate goes up and the monthly payment amount is too small to cover the increased interest charges.


Short for principal, interest, taxes, and insurance. These are the basic monthly housing costs that lenders consider when evaluating a borrower's qualification for a loan, as in: the PITI may not exceed 28% of the borrower's gross monthly income.


A fee charged by lenders at settlement equal to one percent of the loan amount. Points are charged so as to raise the lender's yield above the apparent interest rate.


The ability to transfer your mortgage including rate and terms, from your existing property to a new property.


The process of establishing a borrower's qualification for a loan of a particular amount based on income and expenses. Pre-qualification does not guarantee that the loan amount will be approved, but can be used to demonstrate financial capability to an agent or seller.

Prepayment Clause  

A clause in a mortgage agreement that allows you to pay off all or a percentage of the mortgage before the maturity date.

Prepayment Penalty  

A) A fee charged by a lender when the borrower prepays all or a part of a mortgage in excess of the regular payments allowed by the mortgage terms.

B) A charge, which a lender may assess a borrower, if a loan is paid off before the due date.

Primary Lender  

A financial institution, which actually makes mortgage loans from its funds. For Example, if you obtain a mortgage from a bank and the bank then sells the mortgage to the secondary market, the bank is the original, or primary lender. Examples of primary lenders are banks, saving and loans, mortgage companies, and credit unions.

Prime Rate  

The rate of interest charged by a lender to its best customers.


The money borrowed, not including any accrued interest.

Property Tax  

Tax assessed against a property by local governments. One of the four basic monthly housing costs (PITI).


To divide proportionately, so as to determine actual amounts owed by the buyer and seller at closing. For example, if property taxes for a month are $300 and the seller owned the property for the first 10 days while the borrower owned the property for the remaining 20 days, the property taxes owed would be prorated so that the seller would pay $100 ($300 * 10/30) and the buyer would pay $200 ($300 * 20/30).


The process of determining whether a buyer is financially able to assume a mortgage by checking credit history, present and previous employment, and any other sources which may help to determine the buyer's financial capability.

Rate Commitment  

A lenders commitment to offer to hold a specific rate for a certain length of time. Rate commitments can vary from 30 to 180 days.


The right of a lender to reclaim both money and collateral from a borrower who has defaulted on a loan.


To pay in full and discharge a mortgage with the proceeds of a new mortgage.

Registration Fee  

Fee imposed by local governments when transferring ownership of real property.


Real Estate Support Team.

Rest Assured Program  

Typically when selling your property privately, there is usually no helpful advice from a realtor. Rest assured, if you have a question pertaining to the sale of your property, there is professional help you can depend on and call upon.

Richard Kennedy
Hanlon Realty & Associates

Your RESTeam will provide you with an up to date evaluation of your property to effectively allow you to price your property for sale.

Right Of First Refusal  

The right to purchase a property under terms and conditions made by another purchaser and accepted by the seller. For example, if the Jones' make an offer of $120,000 on a property and the seller accepts the offer subject to the Wilsons' right of first refusal, the Wilson's have the right to buy the property for $120,000.


Second Mortgage  

A mortgage registered against real property, which is already encumbered with one mortgage. Date and time of registration determines which is first and which is second.

Sheriff's Certificates  

Sheriff certificates are obtained from the sheriff's offices in the names of all parties to the transaction. This will ascertain of any of the parties have judgments registered against them. Judgments at the sheriff's office will automatically attach any property in the names of either vendors of a property or purchasers of a property and must be lifted prior to the completion of the purchase/sale transaction.

Strata Fee  

A charge (usually monthly) by a Strata Corporation to cover the costs of maintenance, repair, cleaning etc. of common areas. This fee will usually include a reserve to cover major repairs such as re-roofing and heating system replacement.


There are two portions to a survey. The first being the actual legal description of the property, which will give all measurements to the property. The second is the real property report. This is a report and sketch prepared by the surveyor that outlines the property, the location of the dwelling and any appurtenances such as sheds, fences, driveways and patios.

Tax Hold Back  

When your property taxes are included with your mortgage payments, your lender will withhold funds from your disbursement to cover interim or final taxes payable to the municipality. The amount depends on the month that the mortgage was funded and the dates when interim and final taxes are due. Tax hold backs are used to pay for the current year's taxes while your monthly tax installments are accumulated in an account to pay the tax bills for the following year.


Fee imposed by local governments when transferring ownership of real property.


Total debt service ratio.

Through Title Insurance  

Private insurance for home buyers that covers appliances and plumbing, heating, and electrical systems in the home.


A formal document, which establishes ownership of a property.

Title Insurance  

Insurance that protects a purchaser against any defects that may be discovered in the title after ownership has been transferred.

Title Search  

When property is being purchased in Newfoundland a title search is a standard requirement for all transactions. The title search is conducted at the registry of deeds for Newfoundland to ascertain the registered title history to the property you are buying or selling. This search is required to establish that a clear and marketable title is being passed to you.

Total Debt Service Ratio  

Abbreviated as TDS. Percentage of gross annual income of a borrower required to maintain annual payments of mortgage, property taxes, hydro and other debts such as loans, credit card payments, child support and leases.


The assessment of loan applications based on: the value of real property, a borrowers credit worthiness and ability to pay and the lending guidelines of the lender.


The state of having no mortgages, liens, or other claims against a property. A property that is unencumbered is said to be "free and clear".

Variable Rate Mortgage  

A mortgage where the interest rate varies during the term of the mortgage, usually based on the prime bank rate or the GIC rate of the lender.

Weekly And Bi-Weekly Payments  

You can usually choose to make your mortgage payments once a week or once every two weeks. This accelerates the reduction of your mortgage because you are making the equivalent of one extra monthly payment per year.