Glossary

Adjustable-Rate Mortgage

An adjustable-rate mortgage is one that the lender reviews at set intervals and adjusts based on any changes to the lender’s prime rate (their lowest available interest rate).

Alberta Farm Fuel Benefit

The Alberta Farm Fuel Benefit Program allows eligible producers to receive a 9-cent-per-litre provincial fuel tax exemption on the purchase of dyed gasoline and diesel.

Amortization Period

The length of a mortgage.

Annual Meeting

All condominiums must have a yearly meeting where unit owners have the chance to review the books, elect board members, and discuss important issues.

Associate

A person licensed as an associate but is not qualified to run their own brokerage. They are always employed by, or associated with, a licensed broker and brokerage.

Associate Broker

A person who has completed all the requirements to become a broker but has decided to work as an associate in someone else’s brokerage.

Automatic Savings Plan

A certain amount of money taken out of a bank account each month and transferred into savings or investments.

Bi-Weekly Accelerated

A method of mortgage repayment that happens every two weeks (every 14 days) which works out to 26 payments or the equivalent of 13 monthly payments in a year. This means that every year, you get the benefit of making an interest free payment directly to the mortgage principal, helping to pay it down faster.

Board of Directors

A board of directors (also known as the board) is a group of individuals that run a condominium corporation. Unit owners usually elect board members each year.

Broker

A person who has a license and is authorized to operate a brokerage that trades in real estate. There is only one broker per office, and that person has full responsibility for everything that takes place there.

Brokerage

A company that trades in real estate.

Canadian Agricultural Loans Act Program

Loans backed by the Federal Government and created to help farmers and agricultural co-operatives (co-ops) get money to develop new farms or improve existing ones. Most mortgage lenders can issue and administer these loans, and often lenders pay out the money within 60 days of approval.

Closed Mortgage

A type of mortgage limiting how much you can pay towards the principal before you have extra penalties. Usually, this means there is a cap of the lump sum payments to once per term, and there may also be an upper limit.

Closing

This happens once your seller accepts your offer, you both remove conditions and you both finalize the deal.

Conditions

These are things that need to happen before a property purchase is complete.

Condo Fees

Money paid by condo owners to the condo corporation to cover the cost of repairing and maintaining common and managed property, administrative expenses, insurance, and to maintain the reserve fund. Properly known as condominium contributions.

Condominium

Legally, a condominium is a type of property ownership. Condominium ownership is unique because it is shared property ownership. When you buy a condominium, you get:

• Full ownership of the condominium unit (also known as freehold interest)
• Shared ownership of the common property (also known as tenants in common or co-ownership)

Condominium Corporation

Created upon registration of a condominium plan with a land titles office. The corporation consists of all the individuals who own units in the condominium complex. The condominium’s board of directors runs the corporation.

Conversion Unit

A conversion condo unit is where a non-condominium property becomes a condo. The end result is the creation of new units from an already existing building (most often warehouses, breweries, etc.).

Cooperative

A type of home ownership where you do not own the property, but shares in the corporation itself. As a shareholder, you have the right to the exclusive use of a single unit in that property, and you will also have a say in management of the property.

Credit

Your ability to buy something without paying for it right away, based on the trust that you will pay for it in the future.

Credit Bureau

A credit bureau collects account information directly from creditors or stores and uses it to make a report they provide to financial institutions.

Credit Report

Snapshot of your financial history for the last 5 to 10 years. One of the main tools that lenders (like banks and credit card companies) use to decide whether to approve your credit, such as a mortgage.

Credit Score

Measure of how risky you are to a lender in the form of a three-digit number based on the personal information from your credit report.

Debt Load

The amount of your monthly income that goes to paying debts such as credit cards, loans, utilities, mortgages, property taxes, and condo fees.

Down Payment

A down payment is the amount of money you can pay, in one lump sum, towards the purchase of a home.

Duplex

Two units, on the same lot, either upper and lower or side-by-side. This means there is only a single lot or title, but with two separate living areas. Each unit can be owned separately, although often the owner of the property will live in one unit and rent out the other.

Environmental Reserve

Generally, land that is unsuitable for development (for example, the land is swampy or steeply sloped) or that the country wants to protect (for example, wildlife habitats or vulnerable water sources).

Environmental Survey

Surveys completed by licensed surveyors, who will check to see if any toxic or hazardous substances that may have leached into the ground. If there are, they will need cleaning up before you can use the property.

Equity

A measure of the value of a home versus how much money you still owe on it. Equity usually grows as you pay down your mortgage since the property value stays the same or increases. In some rare cases, equity can drop if the value of a home or property falls a large amount.

Estoppel Certificate

A statement indicating whether condominium contributions (fees) have been paid.

Eviction Notice

Also known as Notice of Termination of Tenancy for Substantial Breach in Alberta, this is a 14-day written notice from the landlord that they will be ending the rental agreement. The notice must be in writing, signed, provide the address of the property, the reason for the termination, and how much rent is owing.

Exclusions

Items (attached and non-attached) you do not want to come with a home purchase, and you list in your purchase offer.

Expiry Date

The date the other party has to accept the offer, or submit a counter-offer.

Fixed Rate Mortgage

Mortgages with a set, or ‘fixed’ interest rate for the entire 1-to-5-year term. Fixed rate mortgages usually come with a slightly higher interest rate.

Foreclose

A type of legal action that a lender can take if a person stops paying the money they owe on their mortgage. This allows the lender to take, or sell, that person’s house by first getting a Court’s permission to do so.

Freehold

A type of property ownership where you own the home and the land. With this ownership type, you are fully responsible for the maintenance and repair of the property and generally have the right to property alterations (as long as there are no civil bylaws or local planning rules restricting it).

Freehold Mineral Rights Owners

This is a type of rights ownership the landowner, not the government or a private corporation, holds the mineral rights.

Garden Suites

Single or two-storey structures built in the backyards of single detached homes.

Hi-rise or Low-rise Condominiums

Multi-story residential buildings containing condominium units. These often feature shared common entrances to the building, and separate doors into the individual units themselves.

Home Appraisal

When you apply for a mortgage, the lender will usually get an independent expert to view the property to see how much it is worth before approving the mortgage.

Home Buyers Grants

Government programs that can provide extra money or tax credits to people who are looking to purchase, or upgrade, their home.

Home Buying Team

The team of professionals (real estate practitioner, home inspector, lawyer, etc.) that you hire to work together with you.

Home Inspection

A type of property inspection by a professional to make sure that there are no major, or hidden, problems with the home before you buy it.

Home Inspector

Person who performs the home inspection. They should be part of a professional home or building inspection

Home Maintenance

Home maintenance focuses on making sure everything in your home, including the building/unit, works properly. This means spending time checking, repairing, and looking after things so that your home is in the best shape possible.

Inclusions

Items (attached and non-attached) you want to come with a home purchase, and you list in your purchase offer.

Land Title

Legal document showing who owns, or has a claim, to the property.

Lifestyle Inflation

Lifestyle inflation is where you start spending more money because you are making more.

Manufactured or Mobile

A factory-built, pre-fabricated, single-family dwelling that you transport to your chosen location and place on a foundation.

Market Value

The worth of a property or home on the current market. This may not be the same as the purchase price, or what a home’s list price is.

MLS®

Short form of Multiple Listing Service, which REALTORS use to collect and share information on properties that are for sale.

Mortgage

Mortgages are loans given to you by a financial institution so you can buy a home. When you take out a mortgage, you agree to pay it back over a set period of time (called a term), usually by making monthly or bi-weekly payments.

Mortgage Broker

A mortgage broker is a person who shops around for the best mortgage rates and then advises you on which lenders are most likely to approve your mortgage application. You do not borrow money from a mortgage broker; they only act as middleman.

Mortgage Loan Insurance

A type of insurance that you must purchase when your down payment is less than 20% of the total purchase price or if you have poor credit history or are self-employed.

Multiple Listing Service®

This is a listing service that REALTORS use to collect and share information on properties that are for sale.

Offer of Purchase

Once you decide on a home you would like to buy, this is the first step in the purchasing process. You will need to submit a price you are willing to pay, as well as any conditions you want to include.

Open Mortgage

A type of mortgage that gives you freedom to pay off the remaining balance whenever you want. Additionally, there are no restrictions preventing you from making lump sum payments at any time, to help reduce the principal amount.

Periodic Rental Agreement

A type of rental agreement that usually runs from month to month but can also be week-to-week or year-to-year. You can renew these agreements automatically, or either party can end them if they give proper notice.

Possession Date

When the property becomes yours, the seller has moved out, and you can move in.

Power of Sale

A legal action where the lender takes control of the property through the court system and sells it to someone else at market value if you don’t pay your mortgage (or get far behind in payments).

Pre-Approved

A process where the lender looks at your finances and finds out the maximum amount of money they will lend you for a mortgage. The final approval process will depend on the value of the home you wish to buy, as well as actual size of your down payment.

Pre-Possession Inspection

A final check of the home after the seller has finished moving out. This is to make sure no damage and that the home is in good condition upon possession.

Principal

The total amount of money you still owe on your mortgage. Your mortgage interest is based on the remaining principal.

Qualifying Interest Rate

An interest rate that is usually much higher than the actual mortgage rate you are applying for. Lenders use this rate to make sure you will still be able to afford your mortgage, even if interest rates rise quickly and unexpectedly.

Real Estate Lawyer

Lawyers who specialize in paperwork and process of buying a home. Your real estate lawyer should be knowledgeable and experienced about the provincial Real Estate Act, and local regulations and restrictions.

Real Estate Practitioner

A real state professional who can help you through the property buying process. In Alberta, there are many kinds of brokers and associates, but they all must have a license through the Real Estate Council of Alberta.

Real Property Report

A legal document showing physical improvements to a property. It also has the surveyors’ comments or concerns about the land itself.

REALTOR®

A licensed associate, associate broker, or broker who must be a member of a local real estate board. As a member of their local board, a REALTOR® is also a member of the Alberta Real Estate Associate, as well as the Canadian Real Estate Associate.

Resale Unit

A type of condo unit that the previous owner sells. It is already part of an established condo community, and the previous owner has usually lived in it.

Reserve Fund

Money set aside by the condominium corporation. It covers the costs of major repairs to or replacement of the corporation’s real, personal, common and managed property.

Reserve Fund Study

A physical inspection of the condominium’s depreciating property (e.g., roof, heating system, entrance doors, etc.) that must be complete every five years.

Residential Tenancies Act

Provincial legislation that outlines the rights and responsibilities of most landlords and tenants in Alberta.

Row or Townhouse

One of several single-family homes joined by common walls and is often two or more storeys tall. Townhouses can be condominiums, but they can be freehold units.

Rural Real Property Report

Reports prepared by a licensed surveyor, which cover improvements to the property, any encroachments from neighbours, and compliance with local municipal bylaws.

Secondary Suite

A self-contained area within a single-family home, that has its own kitchen, bathroom, and a separate entrance.

Semi-Detached

A single family home that is one of a pair that share a common wall. Each home is either built on its own lot, or else has its own title, making it two separate homes that happen to share a wall.

Semi-Monthly Payments

A method of mortgage repayment where you pay your monthly payment in two installments. Since your monthly interest in only calculated once, you can pay a little extra towards the balance which ultimately helps you pay it down faster.

Septic Certificate

A certificate confirming that a new septic system is up to provincial and municipal codes, and that the system design and installation was proper.

Single-Detached Dwelling

A free-standing home which sits on its own lot, has its own title, has open space on all sides and has no attached dwellings nor attached structures (except for its own garage or shed). Includes bungalows, bi-levels, split-levels, and two-story homes.

Starter Home

Typically, the first home that people buy as it is usually smaller and less expensive than a larger family home. It can be anything from a condo, townhouse, duplex or even a freestanding single-detached dwelling.

Surveyor

Professionals who will check the health of the soil, any environmental concerns, and the general state of the property itself.

Tax Credits

The amount of money that taxpayers can subtract from taxes owed to their government.

Tax-Free Savings Account

A type of savings account allowing you to withdraw your money at any time without any tax on the income that you earn from interest in the account.

Term

A period in a mortgage that you lock in type of mortgage and interest rate. Most terms are between 6 months and 5 years.

Variable Rate Mortgage

Mortgages where your loan interest rate changes throughout the term depending on our lender’s interest rate, but your payments do not.

Water and Soil Test

A type of test when buying a rural home that can help you make sure the land and aquifer are healthy and potable.

Water Potability Certificate

A certificate confirming that the water (from a water sample) on a property is safe for humans.

Well Drillers Certificate

A certificate that you will need if you dig a new well, confirming there is good flow rate and potability.