Whether you’re looking to buy in Surrey, Cloverdale, Langley, or any of the surrounding areas, buying a home is a huge commitment.
It’s one of the biggest financial investments you’ll ever make.
If you’ve never done this before, real estate terms and jargon can be confusing.
As a top-rated White Rock Real Estate Agent, I make it my mission to guide clients through this process.
I’m very passionate about helping my clients find the perfect home.
Please reach out to me if you have any questions about the Fraser Valley or Vancouver Real Estate Markets.
If you’re looking for some quick info, check out RE/MAX Canada’s top terms that Home Buyers should know.
You can read the full article on RE/MAX blog
You can read my Sellers Glossary post here
28 Real Estate Terms for Buyers
Amortization is the length of time allotted to paying off a loan. In home-buying terms, this is the mortgage.
Most maximum amortization periods in Canada are 25 years.
In a balanced market, there is an equal balance of buyers and sellers in the market.
This means reasonable offers are often accepted by sellers.
In this type of market, homes sell within a reasonable amount of time and prices remain stable.
Bridge Financing refers to a short-term loan designed to “bridge” the gap for homebuyers who have purchased their new home before selling their existing home.
This type of financing is common in a seller’s market, allowing homebuyers to purchase without having to sell first.
The buyer’s agent represents the homebuyers and their interests in the transaction.
On the other side of the transaction, the listing agent represents the seller and his or her interests.
In a buyer’s market, there are more homes on the market than there are buyers. This gives the limited number of buyers more choice and greater negotiating power.
Homes may stay on the market longer, and prices can be stable or dropping.
Closing is the final step in the home selling process.
At the end of the closing period, once all offer conditions outlined in the Agreement of Purchase and Sale have been met, ownership of the property is transferred to the buyer.
The keys are exchanged on the closing date outlined in the offer.
Closing Costs refer to the costs associated with “closing” the purchase deal.
These costs can include legal and administrative fees related to the home purchase.
Closing costs are additional to the purchase price of the home.
Condo ownership is a form of property ownership whereby you own your unit and have an interest in common areas such as the lobby, elevators, halls, parking garage, and building exterior.
The condominium association is responsible for the maintenance of buildings and common elements, and collects a monthly condo fee from each owner, based on their proportionate share of the building.
Condos often have guidelines regarding noise, use of common areas, and allowable renovations within the units themselves.
A Deposit is an up-front payment made by the buyer to the seller at the time the offer is accepted.
The deposit shows the seller that the buyer is serious about the purchase.
This amount will be held in trust by the agent or lawyer until the deal closes, at which point it is applied to the purchase price.
The down payment is the amount of money paid-up front for a home, in order to secure a mortgage.
In Canada, the minimum down payment is 5% of the home’s total purchase price.
Down payments of less than 20% of a home’s purchase price require mortgage loan insurance.
The selling price, minus the deposit and down payment, is the amount of the mortgage loan.
Dual agency is when one real estate agent (or real estate brokerage) represents both the homebuyer and the seller in a real estate transaction.
There are limitations and requirements around dual agency, which differ by province.
Equity is the difference between a home’s market value and the amount owing on the mortgage.
This is the portion of the home that has been paid for and is officially “owned.”
A fixed-rate mortgage guarantees your interest rate and for a pre-determined amount of time, typically 5 years.
When the term expires, you have the option to stay with the same lender or switch to a different one.
Free Ownership is a form of ownership whereby you own the property and assume responsibility for everything inside and outside the home.
Gross Debt Service
The percentage of your total monthly income that goes toward housing costs.
Canada Mortgage and Housing Corp. recommend your GDS remains at or below 35%.
Check out CMHC’s Gross Debt Service calculator.
A high-ratio mortgage is a mortgage where the borrower has less than 20% of the home’s purchase price to make as the down payment.
A high-ratio mortgage with a down payment between 5% and 19% of the purchase price requires mortgage loan insurance.
In Canada, 5% is the minimum amount required for the down payment.
A Home Appraisal is completed by a qualified professional. The Appraisor provides a market value assessment of a home based on several factors such as property size, location, age of the home, etc.
This is used to satisfy mortgage requirements, giving mortgage financing companies confirmation of the mortgaged property’s value.
Home Buyers’ Amount
This is a $5,000 non-refundable federal income tax credit on a qualifying home, providing up to $750 in tax relief to assist first-time buyers with purchase-related costs.
Home Buyers’ Plan
A federal program allowing first-time homebuyers to withdraw up to $35,000 interest-free from their Registered Retirement Savings Plan (RRSP) to help purchase or build a qualifying home.
The borrowed amount must be repaid within 15 years to avoid paying a penalty.
The home inspection is performed to identify any existing or potential underlying problems in a home.
This not only protects the buyer from risk but also gives the buyer leverage when negotiating a reduced selling price.
A type of warranty that protects the homeowners against future problems with the home for a determined period of time.
New home builders are required to offer warranty protection to homebuyers.
Home warranty requirements and providers differ by province.
Home warranty programs also exist for resale homes.
A land survey will identify property lines.
This is not required to purchase a home, but it is recommended and may be required by the mortgage lender to clarify where on the property the owner has jurisdiction.
This is important if issues arise between neighbours or the municipality, should the owner wish to make changes in the future such as installing a pool, fence, or other renovations involving property lines.
Land / Property Transfer Tax
This is the tax payable by the buyer to the province in which the transaction occurred upon transferring land.
The amount varies depending on the municipality, the size of the land, and other factors.
Most provinces have Land Transfer Tax, though it may have a slightly different name (such as property purchases tax).
In B.C. we have Property Transfer Tax.
If you are a first-time homebuyer, you may be eligible to receive a rebate, which is typically processed at the same time as the land registration, so the costs can be offset.
Mortgage Loan Insurance
If your down payment is less than 20% of the purchase price of the home, mortgage loan insurance is required.
It protects the lender in case of payment default.
Premiums are calculated as a percentage of the down payment, changing at the 5%, 10% and 15% thresholds.
A mortgage pre-approval helps buyers understand how much they can borrow before going through the mortgage application process.
It allows you to make an immediate offer when you find a home, since you know how much you’ll be approved for.
The lender locks in the current interest rate for a period of time insulating you against short-term rate increases.
An offer is a legal agreement to purchase a home.
An offer can be conditional on a number of factors, commonly conditional on financing and a home inspection.
If the conditions are not met, the buyer can cancel their offer.
Transferring your mortgage (and the existing interest rate and terms) from one property to another.
In a seller’s market, there are more buyers than there are homes for sale.
With fewer homes on the market and more buyers, homes sell quickly in a seller’s market.
Prices of homes are likely to increase, and there are more likely to be multiple offers on a home.
Multiple offers give the seller negotiating power, and conditional offers may be rejected.
Title insurance is not mandatory in Canada, but it is highly recommended to protect both the buyer and the mortgage lender against losses related to the property title or ownership, such as
- unknown title defects
- existing liens against the property’s title
- encroachment issues
- title fraud
- errors in surveys and public records
- and title-related issues that could prevent you from selling, leasing, or obtaining a mortgage.
Your lawyer can advise you on this.
Variable Rate Mortgage
A variable rate mortgage fluctuates with the prime rate.
Your monthly payments remain the same, but the proportion of your payment going toward principal versus interest can change.
The home-buying process completed by means of technology in place of face-to-face contact.
Some common technology tools include 360 home tours and video showings, video conference calls, e-documents, e-signatures, and e-transfers.
Need more info on South Surrey Real Estate?
If you have additional questions or would like to know more about South Surrey Real Estate or the surrounding areas, please contact me.