- Agreement of Purchase and Sale (APS)
- The legal contract between buyer and seller in a real estate transaction. It includes the purchase price, deposit amount and timeline, closing date, conditions, and a list of what's included in the sale (appliances, fixtures). Once both parties sign and all conditions are satisfied, the deal is firm and legally binding. Walking away from a firm APS means forfeiting your deposit and potentially facing legal action.
- Amortization
- The total length of time it takes to fully repay your mortgage. In Canada, the standard amortization is 25 years. Since December 15, 2024, first-time buyers with insured mortgages can choose 30 years. Longer amortization lowers your monthly payment but means you pay significantly more interest over the life of the loan. A 30-year amortization on a $600,000 mortgage can cost $60,000–$80,000 more in total interest than a 25-year amortization.
- Appraisal
- An independent assessment of a property's market value, conducted by a licensed appraiser. Your mortgage lender orders an appraisal to confirm the property is worth what you're paying. If the appraised value comes in below your purchase price, the lender will only mortgage up to the appraised value — you'll need to cover the difference in cash or renegotiate. Appraisals typically cost $300–$1,000 and are usually paid by the buyer.
- Bully offer
- An offer submitted to a seller before their scheduled offer presentation date, intended to preempt competing bids. Sellers sometimes set a date to review all offers simultaneously — a bully offer jumps the queue. These offers are typically well over asking price and have few or no conditions, making them hard for sellers to refuse. When a bully offer is received, sellers must notify other interested parties and give them a chance to respond, though the window is short. Sometimes called a pre-emptive offer.
- Closing costs
- All costs payable at closing beyond the down payment itself. These include land transfer tax (Ontario and Toronto municipal, where applicable), legal fees, title insurance, home inspection, appraisal, CMHC insurance PST (Ontario 8%, paid in cash if your mortgage is insured), property tax adjustment, and utility hookup fees. Budget 1.5–4% of the purchase price for closing costs. In Toronto with first-time buyer rebates, the combined LTT on a $700,000 home is still approximately $10,975 after rebates.
- Closing date
- The date on which title of the property legally transfers from the seller to the buyer. Money changes hands, the deed is registered, and you receive the keys. Everything must be in order by closing day — your lawyer needs the mortgage funds wired, the closing cost cheque prepared, and all documents signed. Problems on closing day are expensive to fix. Confirm everything with your lawyer at least a week in advance.
- Conditions
- Clauses in an offer that allow the buyer to exit the deal if a specific requirement isn't met within a set time period. Common conditions are financing (your mortgage is approved), home inspection (the property passes inspection), and status certificate (the condo corporation's finances are healthy). If conditions aren't satisfied within the agreed period, you can walk away and get your deposit back. After conditions are waived, the deal is firm.
- Conditional period
- The window of time after an offer is accepted during which the buyer completes their due diligence before waiving conditions. Typically 5–10 business days. During this period, you arrange and complete your home inspection, finalize your mortgage approval with the lender (who needs to approve the specific property), and for condos, have your lawyer review the status certificate. This is the most important phase of the deal — don't rush it.
- Deposit
- A good-faith payment made by the buyer when an offer is accepted, typically 5% of the purchase price. Paid within 24 hours of acceptance by certified cheque or bank draft to the seller's brokerage, and held in trust until closing. The deposit is applied toward the purchase price on closing day. If you back out during the conditional period, your deposit is returned. If you walk away from a firm deal after conditions are waived, you forfeit the deposit and may face further legal action.
- Down payment
- The portion of the purchase price you pay upfront in cash, not borrowed from a lender. In Canada, the minimum down payment is 5% on homes under $500,000, increasing on a sliding scale to 20% on homes over $1.5 million. Putting at least 20% down avoids the need for CMHC mortgage insurance. Common sources: personal savings, FHSA withdrawals, RRSP Home Buyers' Plan withdrawals, gifts from family. All must be documented for your lender.
- Fixed-rate mortgage
- A mortgage where the interest rate stays the same for the full term (usually 5 years), regardless of changes in the Bank of Canada's overnight rate. Your payment is identical every month, which makes budgeting straightforward. Fixed rates are typically slightly higher than variable rates when you sign, because you're paying for the certainty. Breaking a fixed-rate mortgage early carries a larger penalty (interest rate differential) than breaking a variable rate (3 months' interest).
- Freehold
- Ownership of both the land and the building on it. A freehold buyer owns the property outright — no condo corporation, no maintenance fees, no shared management. You're responsible for all maintenance, repairs, and decisions, but you also have full autonomy. Freehold properties include detached houses, semi-detached houses, and some townhomes. The key benefit: you own the land, which typically appreciates independently and adds to total equity over time.
- GDS ratio (Gross Debt Service)
- One of two ratios lenders use to determine how much you can borrow. GDS measures the share of your gross monthly income that goes toward housing costs: mortgage principal and interest, property taxes, heating, and 50% of condo fees if applicable. The maximum GDS allowed is 39%. If your gross monthly income is $8,000, your maximum housing costs under the GDS limit are $3,120/month. Lenders calculate this at the stress test rate, not your actual contract rate.
- Home inspection
- A visual examination of a property's condition conducted by a licensed inspector. A standard inspection covers the roof, foundation, structure, electrical system, plumbing, HVAC, insulation, windows, and interior. It does not cover items that require specialized testing: pools, mold, asbestos, radon, or underground oil tanks. In Ontario, inspectors must be licensed by HIRAO (as of August 2023). Inspections cost $400–$600 typically and take 2–4 hours. You should attend and ask questions.
- Land transfer tax
- A provincial tax charged on every property purchase in Ontario. The rate is progressive, starting at 0.5% on the first $55,000 and rising to 2.0% on amounts between $400,000 and $2 million. Toronto properties face a second, identical municipal tax. First-time buyers receive a provincial rebate of up to $4,000 and a Toronto municipal rebate of up to $4,475. On a $700,000 Toronto purchase, a first-time buyer pays approximately $10,975 in net land transfer tax after both rebates.
- Mortgage
- A loan secured by real property. The lender advances money to buy the property; the property itself serves as collateral. If you stop making payments, the lender can eventually take possession through foreclosure. In Canada, mortgages are structured with a term (typically 5 years, after which you renew) and an amortization period (typically 25 years, the total repayment timeline). The interest rate, payment amount, and mortgage type are negotiated at the start of each term.
- Mortgage stress test
- A federal regulation requiring lenders to qualify buyers at a rate higher than they're actually borrowing at. The qualifying rate is the greater of: your contract rate plus 2 percentage points, or the government's minimum qualifying rate floor. Even if you're borrowing at 5%, the bank qualifies you as if you were borrowing at 7%. This reduces the maximum you can borrow by roughly 15–20%. The test exists to ensure buyers have financial room to handle rate increases during the loan.
- Multiple offers
- When more than one buyer submits an offer on the same property at the same time. Common in competitive markets. The seller reviews all offers simultaneously (usually on a set "offer night") and accepts the most attractive one — not always just the highest price. Multiple offer situations often result in purchases above the asking price, shorter or no conditions, and larger deposits. You bid without knowing what other buyers are offering.
- Open mortgage
- A mortgage that allows you to pay off any portion of the principal at any time without a prepayment penalty. The tradeoff is a higher interest rate than a closed mortgage — sometimes significantly so. Open mortgages make sense when you expect to sell the property soon, receive a large lump sum, or need maximum repayment flexibility in the short term. Most buyers don't need one. For most first-time buyers, a closed mortgage with annual prepayment privileges is both sufficient and more economical.
- Pre-approval
- A formal commitment from a lender to mortgage a specific amount at a specific rate, valid for 90–120 days. Pre-approval requires you to submit income documents, bank statements, and consent to a credit check. The lender verifies everything and issues a written commitment. Pre-approval locks in your rate, tells you exactly what you can borrow, and signals to sellers that you're serious. It's different from pre-qualification — which is just an estimate based on unverified information.
- Pre-qualification
- An informal estimate of how much you might borrow, based on income and debt information you provide verbally or online. Nothing is verified. No credit check is done. The number you get is a rough guide, not a commitment. Pre-qualification is useful for initial planning — understanding what range of homes to look at — but sellers and agents won't take it as seriously as a pre-approval. Get pre-approved before you start making offers.
- Principal
- The original amount of money borrowed on a mortgage, not including interest. When you make your monthly mortgage payment, a portion goes toward interest and the rest reduces the principal. Early in your mortgage, most of the payment is interest. Over time, more of each payment goes toward principal as the balance decreases. Extra prepayments go entirely toward principal, reducing your amortization and total interest paid.
- Statement of Adjustments
- A document prepared by your real estate lawyer before closing that itemizes every financial element of the transaction. It shows the purchase price, your deposit credit, the mortgage amount, land transfer tax, property tax adjustment (if the seller has prepaid taxes beyond your closing date, you reimburse the pro-rated portion), and other closing costs. The Statement of Adjustments tells you exactly how much money to bring to closing. You'll receive it a few days before closing day.
- TDS ratio (Total Debt Service)
- The second ratio lenders use to limit borrowing. TDS measures the share of gross monthly income going toward all debt obligations: housing costs (mortgage, taxes, heat, condo fees) plus all other debts (car payments, student loans, credit card minimums). The maximum TDS is 44%. If your existing debts take up a large portion of your income, you'll qualify for a smaller mortgage. Every $500/month in existing debt payments reduces your borrowing capacity by roughly $60,000–$80,000.
- Title insurance
- Insurance that protects a property owner and their lender against losses from title defects — things like undisclosed liens on the property, survey errors, encroachments, or fraud. Your real estate lawyer arranges it at closing. A lender's policy is almost always required by your mortgage provider. An owner's policy — which protects you personally, not just the lender — is strongly recommended and relatively inexpensive ($200–$400 typically). It protects you for as long as you own the property.
- Variable-rate mortgage
- A mortgage where the interest rate moves with the lender's prime rate, which tracks the Bank of Canada's overnight rate. When the Bank of Canada raises rates, your variable rate goes up. When it cuts rates, your variable rate falls. Some variable mortgages adjust the payment amount; others keep the payment constant but change how much goes toward interest vs principal. Variable rates have historically been lower on average than fixed rates, but require more budget flexibility to handle increases.
A
B
C
D
F
G
H
L
M
O
P
S
T
V