Education Center

This page will provide some useful information and relevant content for you to educate yourself on various aspects of your home purchase and mortgage terminology.  Additional contact information for government and utility providers is located here as well.

  • Below you will find a list of possible extra costs that might not spring readily to mind when contemplating a house purchase. Some fees would be considered one-time fees, while others will be regular monthly expenses. It is important to note that not all of these items may apply to your particular situation. Your solicitor will review all closing costs with you prior to the closing of your mortgage.

    Taxes:

    13 % HST applies to new housing. A rebate of up to 2.5% would be applied to the tax if your home was purchased for less than $450,000. HST does not typically apply for homes purchased resale.


    Property taxes:

    Property taxes vary based on the government’s assessment of the value of the property, but it is a cost that all home owners are required to pay.


    Property insurance:

    This is required by any lender. Property insurance covers the replacement value of your home and its contents.


    Mortgage loan insurance premium and application fee:

    For high-ratio mortgages (mortgages that have a loan to value ratio that exceeds 80%), lenders require mortgage loan insurance provided by CMHC, Genworth or a private company. Costs associated with the insurance are typically between 0.5% and 3.75% of the amount of the total mortgage (additional charges may apply) and can be included in the mortgage. The application fee will range from $75 to $235.


    Home inspection fee:

    Fees for a home inspector will vary, but a good benchmark is between $150-$300.


    Appraisal fee:

    In many cases, a lender may require a property appraisal. A good guideline as far as appraisal costs on a typical property is between $150–$250.


    Survey fee:

    Lenders require an up-to-date survey. Typically the individual selling the property will have one. Ask them to provide one as a condition of your Offer to Purchase.


    Prepaid taxes or utility bills:

    If the individual(s) that you are purchasing the home from have prepaid utilities beyond the closing date, you will have to re-pay them on a prorated basis.


    Land transfer tax:

    Applicable in most provinces, but varies as a percentage of the property’s purchase price. Typically, land transfer tax will be between 1% – 4%


    Service charges:

    Fees to hook up your new services and utilities (i.e. cable, telephone etc…)


    Lawyers fees:

    Legal representation is required to review the Offer to Purchase, complete mortgage documents, search the title, and carry out the closing details. Lawyers fees vary and you should consult your solicitor for an accurate breakdown of his/her fees.


    Moving costs:

    Be sure to factor moving expenses into your budget


    Condominium fees:

    If you are moving into a condominium, be prepared for ongoing monthly fees for common-area maintenance i.e. grounds keeping, cleaning etc..

  • MISSISSAUGA:

    Mississauga Hydro: (905) 273-7425
    Waste Management: (905) 791-7800 Ext 4636 or 1888-919-7800
    Bell Canada: (905) 310-2355 or 1800-668-6878
    Rogers Cable: 1888-764-3771
    Union Gas: 1888-774-3111

    www.city.mississauga.on.ca

    BRAMPTON:

    Hydro One Brampton: (905) 840-6300
    Rogers Cable: 1888-764-3771
    Waste Management: (905) 791-7800 Ext. 4636
    Bell Canada: (905) 310-2355 or 1800668-6878
    Enbridge Gas: 1888-492-5100

    www.city.brampton.on.ca

    OAKVILLE/BURLINGTON:

    Oakville Hydro: (905) 825-9400
    Burlington Hydro: (905) 332-1851
    Halton Waste Management: (905) 825-6000
    Cogeco Cable: 1866-427-7451
    Bell Canada: 1800-668-6878
    Union Gas: 1888-774-3111

    www.oakville.ca & www.city.burlington.on.ca

    GREATER TORONTO AREA (GTA):

    Toronto Hydro: (416) 382-6540
    Toronto Waste Management: (416) 392-4546
    Bell Canada: 1800-668-6878
    Rogers Cable: 1888-764-3771
    Enbridge Gas: (416) 492-5100

    www.city.toronto.on.ca

  • A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

    Top
    A

    AMORTIZATION

    The gradual reduction of a debt by means of a regular payment. Repayments of principal and interest in “blended” amounts. The normal amortization period for a mortgage in Canada is 25 years for high ratio mortgages but can be as short as 5 years (As of November 1, 2012). 30 year amortizations are still available on conventional mortgages.

    APPRAISAL

    Lenders require an independent assessment of the value of the home you are buying before agreeing to finance the purchase.

    ASSESSED VALUE

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

    ASSESSMENT

    A tax or charge levied on property by a taxing authority to pay for improvements such as sidewalks, streets, and sewers.

    ASSETS

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

    ASSUMPTION (of mortgage)

    Buyer assuming responsibility of seller’s existing mortgage at the interest rate and terms as laid out in the original mortgage documents.

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    B

    BLENDED MORTGAGE

    A mortgage that combines the amount owing on an existing mortgage with additional funds being advanced. The interest rate would be a combination of the rate on the old loan and the rate in effect at the time of the new financing.

    BRIDGE FINANCING

    Interim financing to bridge the time gap between the closing date on the purchase of a new home and the closing date on the sale of the current home.

    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.

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    C

    CHATTEL

    Articles of personal property such as household goods, furnishings, and fixtures that are not permanently affixed to the house.

    CLOSED MORTGAGE

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

    CLOSING

    The meeting (usually in a lawyer’s office) at which the transfer of title of property passes from the seller to the buyer.

    CLOSING COSTS

    All the charges that are attached to the closing ceremony. These one-time fees include charges for title search and insurance, attorney’s fee, lender and/or broker fee(s).

    C.M.H.C.

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

    C.M.H.C. INSURANCE

    If your down payment is less than 20% , 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.

    COMMISSION

    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.

    COMPOUND INTEREST

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

    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 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 80% 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.

    CONVEYANCE

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

    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

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    D

    DEFAULT

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

    DEPOSIT

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

    DOUBLE-UP

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

    DOWNPAYMENT

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

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    E

    EQUITY

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

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    F

    FIXED RATE MORTGAGE

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

    FORECLOSURE

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

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    G

    GROSS DEBT SERVICE RATIO (GDS)

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

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    H

    HIGH RATIO MORTGAGE

    A mortgage loan that exceeds the normal limit of 80% LTV (loan to value) of a conventional mortgage. Typically made possible by a mortgage insurance plan, e.g. CMHC or GE Capital.

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    I

    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.

    INTEREST

    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

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    J

    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).

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    L

    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.

    LIABILITIES

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

    LIEN

    A charge registered against a property.

    LTV (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.

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    M

    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 have sold recently.

    MORTGAGE

    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, 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.

    MORTGAGEE

    The lender of mortgage funds.

    MORTGAGOR

    The borrower of mortgage funds.

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    N

    NET WORTH

    The value of ones assets minus their liabilities.

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    O

    OPEN MORTGAGE

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

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    P

    PORTABILITY

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

    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 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.

    PRINCIPAL

    The money borrowed, not including any accrued interest.

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    R

    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.

    REFINANCE

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

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    S

    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.

    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.

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    T

    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.

    TERM

    The length of time a mortgage has been committed for. The interest rate usually remains constant during this term unless the commitment states otherwise.

    TOTAL DEBT SERVICE RATIO (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.

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    U

    UNDERWRITING

    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.

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    V

    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.

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    W

    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.

 

Moving Checklist

  • 4 Weeks Before Move

    •Look around the house and see what will be discarded, donated to charity •Contact several moving companies and request an accurate quote of your moving charges. •Make any necessary travel arrangements (hotel, car rental,airline) •Arrange for transfer of records
  • 3 Weeks Before Move

    •If you have any pets, arrange for their transportation Collect anything lent out •Notify people and institutions of move
  • 2 Weeks Before Move

    •Begin to draw up a floor plan of your new home and indicate where furniture should go •Set a date with a service firm to prepare your appliances for moving •Start packing •Arrange a babysitter for moving day •Make arrangements with utility companies (A list of local utility companies based on geographic location surrounding the GTA can be found on this page under the Utilities tab )
  • 1 Week Before Move

    •Finish packing all suitcases and basic essentials (take valuable documents and jewels with you) •Drain water from garden hoses •Drain oil/gas from lawn mower and other machinery •Defrost and wipe dry fridge and freezer •Take down curtain rods, shelves, etc. •Apply a light application of quality paste wax to furniture for protection from scratching
  • Moving Day (Out)

    •Plan to stay home until movers have left •Tour house with van operator during inventory •Sign bill of lading, confirm new address and delivery date •Do final check for overlooked items •Windows and doors locked •Utilities disconnected •Lights off •Keys transferred
  • Moving Day (In)

    •Plan to meet movers at new home •Verify utilities have been connected •Check items unloaded with inventory •Make arrangements for reinstallation of appliances •Confirm unpacking requirements