Mortgage and Real Estate Glossary
Alberta Equity's glossary contains hundreds of terms. With this tool, you can click or search through the largest real estate and mortgage glossary in Canada!
- Abandonment
- A disclaimer of ownership by the trustee or debtor in property deemed burdensome or inconsequential. Once property has been "abandoned," it is no longer the property of the estate, and creditors can seek to recover their money.
- Abstract of Judgment
- A court document that states how much the loser of a lawsuit owes, and which creates a lien, or a claim on property, when filed with the county recorder where the property is owned.
- Abstract of Title
- A written history of all the transactions that bear on the title to a specific piece of land. An abstract of title covers the time from when the property was first sold to the present. Used by the title company to produce a title binder.
- Acceleration Clause
- The section of a mortgage document that allows the lender to speed up the payment date in the event of a default, making the entire principal amount due.
- Acceptance
- A property seller's formal, written approval of a buyer's offer.
- Account Agreement
- An agreement that you sign and which lists your rights and responsibilities and the bank's rights and responsibilities for the bank account.
- Accounting Method
- The method used by a business or individual to keep records. Most individuals and small businesses use the cash method, although businesses that maintain inventory are required to use the accrual method. See also "Accrual Method" or "Cash Method."
- Accounts Payable
- Money owed by a business for goods and services received.
- Accounts Receivable
- Money owed to a business by purchasers of goods and/or services.
- Accrual Method
- Business accounting in which you report income in the year you earned it and expenses in the year you incur them, rather than reporting income and expenses when you receive payment or when you pay the expenses. Under this method, if you built a deck and billed the client in December 1999, the amount you charged would be reported in 1999 as income even if you didn't get the payment until January 2000. If you own a business that maintains an inventory, you are required to use the accrual method.
- Accrue
- To come into possession or gather together an amount, often over a period of time.
- Accrued Interest
- Interest which has already been earned but has not yet been paid.
- Acquiring Financial Institution
- Merchants must maintain an account with an acquiring financial institution to receive credit for credit card transactions. Daily credit card totals are deposited into the merchant's account minus any fees.
- Acquisition Fee
- A fee charged by some leasing companies for originating the loan, just as mortgage lenders charge points as an origination fee. This fee is often not specified in a contract, but rolled into the capitalized cost when calculating monthly payments.
- Acre
- 43,560 square feet. A plot of land 180 by 242 feet is one acre.
- Acre Foot
- The water or other material needed to cover an acre of land one foot deep. Equivalent to 325,851 gallons.
- Act of God
- When used in insurance policies, an event caused by natural forces such as hail, rain, tornado, lightning, floods or earthquakes, which results in damage to property.
- Active Income
- Active income, such as wages, tips and profits from your business that you materially participate in, and portfolio income, such as interest and dividends. Generally, you cannot offset active income with passive losses. See also "Non-passive Income."
- Actual Age
- The years since a structure was built. Differs from effective age.
- Actual Cash Value
- The amount of money that a broker or dealer has invested in the purchase and repair of a used vehicle.
- Add-on Interest
- Interest that is computed at the beginning of the loan, then added to the principal, so that all must be repaid, even if the loan is paid off early.
- Addendum
- A change made to a contract.
- Additional Principal Payment
- Extra money included with a loan payment to pay off the amount owed faster. Over time, this practice reduces the amount of interest paid.
- Additional Property
- Address of real estate that a person owns that is not being financed.
- Adjustable Rate Mortgage (ARM)
- A type of mortgage loan program in which the interest rate and payments may be adjusted as frequently as every month. The principal loan balance or term of the loan may also be adjusted to reflect the rate change. The purpose of the program is to allow mortgage interest rates to fluctuate with market conditions.
- Adjusted Balance
- A method used by some card issuers in which they subtract all payments made during the month, then add the finance charges.
- Adjusted Basis
- The amount you use to determine your profit or loss from a sale or exchange of property. To determine your adjusted basis for an asset, start with the amount you originally paid, add your cost of improvements and assessments, then subtract deductions you have taken, such as depreciation and depletion.
- Adjusted Cost Basis
- The amount paid for an item, plus the amount paid for improvements, minus losses and depreciation. When the owner sells the item, the difference between the sales price and the adjusted cost basis is the profit or loss.
- Adjustment Period
- The time between changes in the interest rate in an adjustable-rate mortgage.
- Adverse Possession
- A means of getting title to land by using it without the objection of the title holder.
- Adverse Use
- Use of someone's property without permission.
- Affidavit
- A written statement sworn to before an authorized official such as a notary public, or commissioner for oaths.
- Affinity Card
- A credit card (usually Visa or MasterCard) that has a promotion arrangement with an affiliated organization (often a charity or non-profit group). The logo of the group appears on the card and the group usually gets a percentage of the sales made on the card.
- Agency
- A relationship between two parties — a client and an agent — in which the agent represents the client in transactions with a third party.
- Agency Closing
- The use of a title company to supervise the meeting where the property is transferred and mortgage is settled.
- Agent
- A person who acts on behalf of another. In real estate, an agent is a person who conducts transactions on behalf of sellers and sometimes buyers.
- Agreed Boundary
- Property lines that are drawn to settle a dispute between neighbouring property owners.
- Agreement of Sale
- A document in which a property's buyer and seller approve the price and other terms of the transfer of title.
- Air Miles
- One of the most popular rewards issued by airline-affiliated co-branded cards. Air miles are earned with every use of the card, and then transferred monthly to the cardholder's account with that airline.
- Alienation Clause
- A requirement that the borrower pay the mortgage in full upon transfer of the property.
- Alimony
- Monthly payments received by an ex-spouse. Payments must be received continuously for one year to be counted toward qualifying income for a loan.
- Allowances
- Money set aside by builders for amenities, such as driveways, landscaping, carpeting and fixtures, that are standard but have optional designs.
- Alternative Minimum Tax
- This tax primarily affects high-income taxpayers who shelter some of their income from tax through certain tax preference items or deductions. It is often referred to in tax publications as AMT and, if your income meets the limit, you have to recalculate your tax due based on the separate alternative minimum tax rates and tables.
- Alternative Mortgage
- A home loan that is not a standard fixed-rate mortgage.
- Amenities
- Desirable features of a neighborhood, housing development or condominium, such as nearby parks, playgrounds, shuffleboard courts, swimming pools, community centers and bocce courts.
- Amortization
- The process of gradually paying down the principal of the loan. As each payment toward principal is made, the mortgage amount is reduced or amortized by that amount. This is in contrast to an interest-only payment where the principal balance is never reduced. The normal amortization period for a mortgage in Canada is 25 years, but can be as short as 5 years.
- Amortization Schedule
- A detailed table showing the amortization of a loan which includes the beginning principal amount, period payments, the interest portion of each payment, the principal reduction portion each payment, and the ending balance. CanEquity has developed a mortgage rate calculator which will generate a perfect example of an amortization schedule.
- Amortization Table
- Mathematical formula for calculating a borrower's monthly payments, based on the amount borrowed, the interest rate and the term of the loan.
- Amortization Term
- The time required to amortize (repay) an entire mortgage loan.
- Amortized Loan
- A loan that is completely paid off, interest and principal, by a series of regular payments that are equal or nearly equal.
- Amount Due at Lease Signing
- The total amount due before the consumer can take delivery of a leased vehicle. It can include any security deposit, title fee, capitalized cost reduction, monthly payments paid at signing and registration fees.
- Amount Financed
- The principal that is financed. It could include the cost of the purchase and other items rolled into the payments.
- Angels
- Private individuals with capital to invest in business enterprises.
- Annual Fee
- A bank charge for use of a credit card levied each year, which can range from $15 to $300, billed directly to the customer's monthly statement. Many credit cards come without an annual fee.
- Annual Mortgagor Statement
- A report sent to the borrower every year, detailing how much principal remains on the home loan and how much was paid in taxes and interest during the previous year.
- Annual Percentage Rate (APR)
- A yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, so borrowers can compare loans. In mortgages, it is the interest rate of a mortgage when taking into account the interest, mortgage insurance, and certain closing costs including points paid at closing. There is no APR in an automobile lease; instead, the cost of money is expressed as the money factor.
- Annual Percentage Yield (APY)
- The percentage, required by Truth in Savings regulations, to be disclosed on interest-bearing deposit accounts that reflects the total interest to be earned based on an institution's compounding method, assuming funds remain in the account for a 365-day year.
- Annuity
- A regular periodic payment made by an insurance company to a policyholder for a specified period of time.
- Anticipatory Breach
- A notification that one party to a contract plans to renege, releasing the other party from having to fulfill its end of the agreement.
- Application
- A document in which a prospective borrower details his or her financial situation to qualify for a loan.
- Application Fee
- What the lender charges to process the document in which a prospective borrower details his or her financial situation to qualify for a loan.
- Appraisal
- An estimate of the market value of a piece of real estate made by a competent professional who knows local real estate prices and markets.
- Appraisal Fee
- What someone charges to deliver a professional opinion about how much a property is worth.
- Appraisal Report
- A detailed evaluation of the value of a property based on an inspection and a review of the values of nearby, comparable properties.
- Appraised Value
- An educated opinion of how much a property is worth.
- Appraiser
- A person qualified by education, training, and experience to estimate the value of real property and personal property.
- Appreciation
- An increase in the value of a property or item.
- Approval
- An assessment made by a lender of a borrower's ability to pay for a home and a confirmation of the amount the borrower may obtain.
- Arbitration
- A dispute-resolution method in which an impartial third party, agreed upon by all sides beforehand, makes a decision.
- Architect
- One who designs buildings.
- Architectural Fees
- Compensation paid to a person who designs buildings.
- Arpent
- An area equal to about 0.845 acres, traditionally used in France, Quebec and Louisiana. Nowadays, hectares and acres are more commonly used measurements of area.
- As is Where is
- The buyer must examine the goods or property and buy at his or her own risk.
- Asbestos
- A fire-resistant element that once was commonly used for insulation. It poses a lung hazard.
- Asking Price
- The amount of money the seller requests for the property or item.
- Assessed Value
- A state or local government's determination of a property's worth for tax purposes.
- Assessment Rolls
- Lists of taxable property.
- Assessments
- Special and local taxes imposed upon property which benefits from an improvement that has been made in the vicinity.
- Asset
- Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others including bank accounts, stocks, mutual funds, and so on.
- Asset Case
- A bankruptcy proceeding in which there are non-exempt assets that might be available to pay the claims of creditors.
- Assignment
- The transfer of a mortgage from one person to another.
- Assignor
- A person who transfers property to another.
- Assumability
- The ability of a mortgage to be taken over by a new borrower.
- Assumable
- A loan or obligation that can be taken over by a new borrower.
- Assumable Mortgage
- A mortgage that can be taken over or "assumed" by the buyer when a home is sold.
- Assumption Clause
- A provision in a mortgage contract that allows a buyer to take responsibility for the loan from the seller.
- Assumption Fee
- A lender's charge for updating records when a buyer takes responsibility for a mortgage from the seller.
- ATM Access Fee
- Fee charged in addition to the individual account fees for an account holder to gain access to the ATM system. Can be monthly, weekly, or annual fee. See also "Automated Teller Machine."
- ATM Alliance
- An alliance of banks and/or credit unions designed to avoid or minimize surcharges for non-bank customers at ATM machines. A customer at one bank in the alliance can use surcharge-free ATMs at all the banks in the alliance. See also "Automated Teller Machine."
- ATM Card Fee
- Fee charged in addition to individual account fees to obtain an ATM card - not a debit card fee. This may be an annual fee or a monthly fee. Also the fee may be per card or per account. For instance, if an account is held jointly, does the bank charge for the second person to hold a card or does it charge one fee for all the cards on an account. See also "Automated Teller Machine."
- ATM Surcharge
- Fee charged for a non-account holder to use bank-owned ATM. Example: You have an account at Bank A but use Bank B's ATM. Bank B will charge you a surcharge. Make sure to review what your bank charges you to use another bank's ATM system. You may have to pay a surcharge to Bank B plus a non-bank owned ATM charge to Bank A. See also "Automated Teller Machine."
- Audit
- An examination by the Internal Revenue Service of a taxpayer's return or other transactions that have tax consequences. Audits range from a simple letter from the agency to a detailed review of individual or business tax filings and records.
- Authorized User
- Any person to whom you give permission to use a credit card account.
- Automated Banking Machine (ABM)
- See "Automated Teller Machine (ATM)."
- Automated Teller Machine (ATM)
- A terminal activated by a magnetically encoded card that allows customers of a bank or other financial institution to conduct everyday banking tasks such as deposits, withdrawals and transfers between accounts. An interconnection of these terminals allows customers to conduct certain transactions around the nation and the world; usually subject to a surcharge fee.
- Automatic Payment
- An arrangement that authorizes periodic withdrawals to be made from a chequing or savings account to pay bills, usually regular monthly payments such as for rent or mortgages.
- Average Annual Yield
- The average yield per year over the life of the investment, assuming all principal and interest remain on deposit until maturity.
- Average Daily Balance
- This is the method by which most credit cards calculate your payment due. An average daily balance is determined by adding each day's balance and then dividing that total by the number of days in a billing cycle. The average daily balance is then multiplied by a card's monthly periodic rate, which is calculated by dividing the annual percentage rate by 12.
- Average Tax Rate
- The real rate of taxes you pay after taking into account the various federal tax brackets. There are different tax rates for different levels of income; you pay lower rates on the first part of your income, more on the later earnings. As you pass each income level, the money above that level is taxed at the next higher rate. Therefore, your average tax rate is less than the top rate you pay on a portion of income.
- Aviation Easement
- An agreement that grants the right to fly airplanes over property, even if the practice causes damage, inconvenience, or loss of property value. Such an agreement usually restricts the property owner from building or growing anything over a specified height.
