A high ratio mortgage applies when a buyer – the “borrower” places a down payment of less than 20% of the purchase price on their home. A mortgage with more than a 20% down payment is called a conventional mortgage. If you don’t have 20% of the lesser of the purchase price or appraised value of the property, your mortgage must be insured against payment default by a Mortgage Insurer, such as CMHC. And the availability of government-backed mortgage insurance is restricted to homes with a value of $1 million or less.
Buyer has a choice of two relationships with a Realtor. As a Client, a real estate company acting as a Buyers Agent must do what is best for the buyer. A written contract, called a Buyer Agency Agreement, establishes buyer agency. It also explains services the company will provide, establishes a fee arrangement for the Realtor’s services and specifies what obligations a buyer may have. Under such agency, a buyer will be obliged to work with that company for a period of time. In return, confidence a buyer shares with that company will be kept confidential. As your Realtor we are also required to offer professional advice, negotiate the best price for the buyer and provide the buyer with as much information required to make the right decision.
As a Customer the buyer can expect to be treated fairly and honestly. It is important for the buyer to realize that under such a relationship the Realtor is technically a sub-agent of the seller so that duties are owed to that seller. However, the buyer can expect the Realtor to disclose all pertinent information about a property, not to misrepresent any facts, and to honestly answer all questions about the property. Under such relationship with the buyer, the Realtor must not imply that they shall negotiate a price for the buyer as that would be a direct conflict with the Realtor sub-agency relationship with the seller and a violation of our rules and regulations.
A real estate company must do what is best for the seller of a property. A written contract, called a Listing Agreement, establishes sellers agency. It also explains services the company will provide, establishes a fee arrangement for the REALTORs® services and specifies what obligations a seller must have.
As your Realtor, we must keep information you have shared in confidence from potential buyers and others. Your Realtor must tell the seller anything known about the buyer. For instance, if the Realtor knows that a buyer is willing to offer more for a property, that information must be shared with the seller. A seller must understand that a Realtor working with a buyer as a sub-agent is ultimately working with the sellers best interest in mind. A Realtor working with a buyer, as a Buyer Agent, is working for the buyers best interest mind, but may still be compensated by the seller through provisions made to the Listing Agent.
CMHC stands for Canadian Mortgage and Housing Corporation. It is a division of the Government of Canada that acts as Canada’s national housing agency. The CMHC’s mandate is to help Canadians access a variety of affordable housing options. It also researches housing and real estate trends in Canada and around the world, providing research to consumers, businesses and other government divisions. The major activity of the CMHC, and the one for which it is best known, is mortgage loan insurance, which insures approved lenders (such as Canada’s chartered banks) against borrower default. Mortgage loan insurance provides approved borrowers access to low-cost mortgage rates. CMHC approved buyers may purchase property with as little as 5% down payment.
The time over which all regular payments would pay off the mortgage. This is usually up to 25 years for a new mortgage.
The process of determining the value of property, usually for lending purposes. This value may or may not be the same as the purchase price of the home.
A type of financing arrangement in which the outstanding mortgage and its terms can be transferred from the current owner to a buyer. By assuming the previous owner’s remaining debt, the buyer can avoid having to obtain his or her own mortgage.
Payments consisting of both a principal and an interest component, paid on a regular basis (e.g. weekly, biweekly, monthly) during the term of the mortgage. The principal portion of payment increases, while the interest portion decreases over the term of the mortgage, but the total regular payment usually does not change.
A one-story house, cottage, or cabin.
A large property complex that is divided into individual units and sold. Ownership usually includes a non-exclusive interest in certain “common properties” controlled by the condominium management.
The final procedure in a home sale in which documents are signed and recorded. This is the time when the ownership of the property is transferred.
A document commonly used in real estate transactions, detailing the fees, commissions, insurance, etc. that must be transacted for a successful transfer of ownership to take place. This document is prepared by a closing agent and is also known as a “settlement sheet”.
Property that is solely used for business purposes.
A legal document that grants the bearer a right or privilege, provided that he or she meets a number of conditions. In order to receive the privilege – usually ownership, the bearer must be able to do so without causing others undue hardship. A person who poses a risk to society as a result of holding a deed may be restricted in his or her ability to use the property. Deeds are most known for being used to transfer the ownership of automobiles or land between two parties.
Real estate that generates income or is otherwise intended for investment purposes rather than as a primary residence. It is common for investors to own multiple pieces of real estate, one of which serves as a primary residence, while the others are used to generate rental income and profits through price appreciation. The tax implications for investment real estate are often different than those for residential real estate.
Property or real estate, not including buildings or equipment, that does not occur naturally. Depending on the title, land ownership may also give the holder the rights to all natural resources on the land. These may include water, plants, human and animal life, fossils, soil, minerals, electromagnetic features, geographical location, and geophysical occurrences.
The total value of the land, including any upgrades or improvements to the land.
A debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses wishing to make large value purchases of real estate without paying the entire value of the purchase up front. Mortgages are also known as liens against property, or claims on property.
A company, individual or institution that originates, sells and services mortgage loans.
The matchmaker between a home buyer and a lender whose goal is to originate a mortgage loan. The broker draws from a pool of various lenders to find the right match.
An entity that lends money to a borrower for the purpose of purchasing a piece of real property. By accepting a mortgage on the real property, the lender creates security in the full repayment of the loan in the future.
An individual or company who borrows money to purchase a piece of real property. By granting the lender an interest in the property, which allows it to lend the funds with an accurate assessment of risk, the mortgagor provides the lender with a guarantee for the full repayment of the loan. Also known as a “chargor”.
Government (usually municipal) laws that control the use of land within a jurisdiction.
The percentage of gross income needed to cover monthly payments for housing and all other debts and financing obligations.
A person with a provincial license to represent a buyer or a seller in a real-estate transaction in exchange for commission. Most Sales Representatives work for a real estate brokerage or agent.