The real estate world has a language of its own, and unless you’ve owned property before, you’re probably unfamiliar with it. As a first-time buyer, here are a few terms you should be familiar with before you start to dip your foot into the world of homeownership.
This is when you make an offer that is conditional upon the successful completion of certain requirements. A complete home inspection report is the most common, with other conditions such as the buyer successfully obtaining financing or selling their home within a specific timeframe. That said, if you’re in a hot market, any conditions you put in place could lead to a rejected offer.
Agreement of Purchase and Sales
This is the legally binding contract that will lay out the conditions the seller might have in terms of what is and isn’t included in the sale. It also lays out the firm details such as the final purchase price, closing date and any limitations the buyer might have, such as time restraints. Both parties are required to sign this document to make the sale official.
Multi-Listing Service (MLS)
This is a type of organization that collects home sale information in one place and distributes it to members: real estate agents and brokers. This listing service is not available to the public; only real estate professionals can access it. There are a variety of MLS organizations around Canada, all paid for and maintained by those working in real estate.
Mortgage Prepayment Penalties
You can incur this penalty if you pay off your mortgage faster than initially agreed to (depending on your specific loan terms, this may not be the case). It exists to offset the loss of interest income to your lender, and to discourage breaking your mortgage.
Vendor Take-Back Mortgage
A VTB is when the seller is in a position to finance all or some of the buyer’s mortgage, meaning the buyer would pay the seller every month, instead of a mortgage lender. This type of mortgage has more benefits for the seller—a higher sale price on their home, monthly cash, a higher chance of selling faster and the avoidance of tax penalties.