How to Buy a New Home
How to Buy a New Home
- Agreement of Purchase and Sale (APS)
- A written contract to buy a lot and home, in which the purchaser and vendor agree upon terms and conditions as set forth in the agreement.
- Length of time over which the debt will be repaid.
- Process for estimating the market value of a property.
- The increase in value of something because it is worth more now than when you bought it.
- Approved Lender
- A lending institution designated as an approved lender by CMHC under the National Housing Act. Only Approved Lenders may qualify for CMHC Loan Insurance.
- Architectural Control:
- In most Ontario municipalities, local governments use zoning laws and architectural controls to ensure that real estate development happens efficiently and that communities are attractive places to live. Architectural controls typically define things like the size, look and feel of homes and how many of the same home can be built on each street.
- A person or company that builds homes.
- A single family dwelling with all main floors living that can be detached or attached, which is either single storey and sometimes a developed basement
- Certificate of Possession (COP)
- This document denotes the effective dates of your policy. When completed by the homeowner upon the final walk-through, it is returned to Tarion to facilitate the issuing of the New Home Warranty Policy.
- Closed Mortgage
- In some cases, a closed mortgage cannot be paid off, in whole or in part, before the end of its term. In other cases, the lender may allow for partial prepayment in the form of an increased mortgage payment or a lump sum prepayment. However, any prepayment made above stipulated allowances may incur penalty charges.
- Closing Costs
- Costs in addition to the purchase price of the home, such as legal fees, transfer fees and disbursements, that are payable on closing day. They range from 1.5% to 4% of a home’s selling price.
- Closing or Closing Day (Freehold)
- Date on which the sale of the property becomes final and the new owner takes title to a freehold home. It is the day when you handle paperwork and pay taxes, fees and other closing costs. It’s also the day you get your keys!
- Closing (Condominium)
- The occupancy period ends when the condominium is registered with the Land Registry Office and you receive the title to your property on the day of Closing. You then receive the ownership of the condominium and will be able to register your mortgage against the condominium and receive the money you have borrowed.
- Canada Mortgage and Housing Corporation. A Crown corporation that administers the National Housing Act for the federal government and encourages the improvement of housing and living conditions for all Canadians. CMHC also develops and sells mortgage loan insurance products.
- CMHC Insurance Premiums
- When a home buyer takes out a mortgage loan with less than a 20% down payment, an insurance premium is paid to CMHC, and a mortgage loan insurance policy is issued to the lender. The CMHC Mortgage Loan Insurance premium is calculated as a percentage of the loan and is based on a number of factors such as the purpose of the property (owner-occupied or rental), the type of loan (i.e. purchase/construction or refinance loan), the ability of a self-employed borrower to supply income verification, and the size of your down payment (i.e. the higher the percentage of the total house price/value that you borrow, the higher percentage you will pay insurance premiums).
- Compound Interest
- Interest calculated on both the principal and the accrued interest.
- Conditional Offer
- An Offer to Purchase that is subject to specified conditions, for example, the arrangement of a mortgage. There is usually a stipulated time limit within which the specified conditions must be met.
- Condition Removal
- After writing a purchase agreement there are conditions pending it’s finalization which are generally associated with obtaining financing. Once financing is in place conditions are removed upon the contract and it becomes legal and binding for the production of the new home to go forward.
- Groups of apartments, townhomes, terrace homes or (more rarely) single family homes that are owned jointly. While individual purchasers are responsible for their homes, all of the owners (the “condo corporation” in Ontario) are jointly responsible for common areas (like lobbies and amenity rooms), services and maintenance. Owners typically pay for these areas, services and maintenance through monthly fees.
- Conventional Mortgage
- A mortgage loan up to a maximum of 80% of the lending value of the property. Typically, the lending value is the lesser of the purchase price and market value of the property. Mortgage insurance is usually not required for this type of mortgage.
- Credit Bureau
- A company that collects information from various sources and provides credit information on a person’s borrowing and bill paying habits to help lenders assess whether or not to lend money to the person.
- Credit History or Credit Report
- The main report a lender uses to determine your creditworthiness. It includes information about your ability to handle your debt obligations and your current outstanding obligations.
- Curb Appeal
- How attractive the home looks from the street. A home with good curb appeal will have attractive landscaping and a well-maintained exterior.
- A legal document that transfers ownership in the real property to the purchaser. This is often called a “Transfer. This document is registered as evidence of ownership.
- Default on Payment
- Failure to make a mortgage payment in accordance with the mortgage document.
- Failing to make a mortgage payment on time.
- Money placed in trust by the purchaser when an offer to purchase is made, for fulfilment of contract.
- The number of homes built on a particular acre of land. Allowable densities are usually determined by local jurisdictions, i.e. the City of Ottawa.
- Down Payment
- The portion of the home price that is not financed by the mortgage loan. The buyer must pay the down payment from his/her own funds or other eligible sources before securing a mortgage.
- An interest in land owned by another person that benefits the person who has the easement, for a specific limited purpose (i.e. right of way permitting passage over a particular strip of land) such as with public utilities.
- The difference between the price for which a home could be sold and the total debts registered against it. Equity usually increases as the mortgage is reduced through regular payments. Market values and improvements to the property may also affect equity.
- Exterior Elevations
- Detailed to-scale drawings that show a home’s exterior with the finishing details and placement (e.g. stone, siding, etc.).
- Features and Finishes
- Builders provide a “features and finishes” document to help homebuyers understand what’s included in their new home. “Features” refer to how the home was designed, or systems behind the walls, such as 9’ ceilings, higher levels of insulation, or high-efficiency windows, while “Finishes” are the materials used to finish the home such as flooring, cabinetry, countertops, railings, plumbing fixtures, etc.
- Fixed Mortgage Interest Rate
- A locked-in rate that will not increase for the term of the mortgage.
- Also called blacklines or blueprints, floorplans are drawings that show the layouts of rooms, floors and other environments created to show the size of spaces, like bedrooms, bathrooms, hallways, as well as the location of doors, windows, staircases, balconies, etc.
- A freehold property is one that you purchase and own outright and the owner is singularly responsible for the maintenance (including the taxes) of the land and the structure(s) on it. In Ontario, most single family homes and townhomes are freehold, while most new apartments for sale are jointly owned by a condo corporation.
- refers to the engineering design level of the house on a lot in relation to the sidewalk, road, laneway and adjacent property. The lot’s grade affects design and construction and requires proper planning to ensure water drains away from the home.
- Gross Debt Service Ratio (GDS)
- The percentage of the gross income that will be used for payments of principal, interest, taxes and heating costs (P.I.T.H.) and 50% of any condominium maintenance fees or 100% of the annual site lease for leasehold tenure.
- Gross Monthly Income
- Monthly income before taxes and deductions.
- High-Ratio Mortgage
- A mortgage loan higher than 80% of the lending value of the property. This type of mortgage must be insured — by CMHC or a private company, for the benefit of the approved lender, against payment default.
- Tall condo or apartment buildings (seven storeys or more) requiring elevators and usually constructed from steel and concrete.
- Household Budget
- A plan that allocates income for household expenses.
- Insurance provides coverage to ensure a loan is paid. See also Mortgage Loan Insurance and Mortgage Life Insurance for more details.
- Insurance Premium
- Payment for insurance.
- The cost of borrowing money. Interest is usually paid to the lender in regular payments along with repayment of the principal (loan amount).
- Interest Rate
- The price paid for the use of money borrowed from a lender.
- Interim Occupancy
- Applies to condominiums only. Also known as interim closing, your interim occupancy period begins the day you occupy your suite and ends the day you take ownership. During interim occupancy, the building is typically still under construction and most of the common elements and amenity spaces are left partially unfinished. The reason for this is to prioritize completing the sold suites. All common elements and amenity spaces will be completed by final closing. During this time, occupied residents must pay a monthly fee to the builder; please note that these fees are not credited to the final purchase.
- Infusion Terrace Home
- Also called a stacked townhouse, these are two two-storey homes that are stacked one on top of the other and built back-to-back. The buildings are usually attached in groups of four or more. Each unit has direct access from the outside.
- Sometimes called “move-in-soon” or “spec” homes, inventory homes have already been constructed, or are in the process of being built, and generally have quicker closing periods. These homes may (or may not) have additional investments built in or finishes selected by the builder.
- Land Registration
- A system to record interests in land, including the ownership and disposition of land.
- Land Surveyor
- A professional who can survey a property in order to provide a certificate of location.
- A legal advisor who is licensed to practice law and who assists people by representing them on legal matters.
- A piece of land on which a building is constructed. When you purchase a new house, you’re buying both the lot and the house that will be constructed on it. Lot shapes, sizes and configuration vary depending on location, community, street patterns and the natural condition of the land (grading/slope).
- In the new home market, developers use the word low-rise to describe single family homes, semi-detached (or side-by-side) homes or townhomes/houses. In Ontario, low-rise homes are typically constructed from wood and finished with brick, stone or siding.
- Lump Sum Prepayment
- An extra payment, made in lump sum, to reduce the principal balance of your mortgage, with or without penalty.
- Maturity Date
- The last day of the term of the mortgage. On this day, the mortgage loan must either be paid in full or the agreement renewed.
- A comprehensive design vision for a complete community that integrates everything from the style and construction of homes, to things like streets, paths, green space, parks, commercial areas, etc. A community that has been master-planned offers homebuyers a chance to see how the community will evolve and grow.
- Buildings that are typically between four and ten storeys tall, often made up of condo apartments for sale, typically constructed from concrete and steel.
- Minto Warranty
- Your contact for any questions you may have about your new home, once you have completed the Design Centre process. Warranty representatives will conduct various inspections with you during construction and after you move in, to demonstrate the operation and maintenance of your new home.
- Model Home
- A home that has been completed and furnished/decorated for sales/presentation purposes. Alternatively, the word “model” can also mean the home design or floorplan, even if there is no physical model home (show home) to walk-through.
- Move-In-Soon Home
- a new home that is either fully built or under construction prior to a customer purchasing it. Purchase to possession can be immediate or take several months (depending on where the home is at in the construction process.)
- A mortgage is a security interest given in the property you are purchasing which secures repayment of the loan related to the property.
- Mortgage Approval
- Written notification from the mortgage lender to the borrower that approves the advancement of a specified amount of mortgage funds under specified conditions.
- Mortgage Broker
- The job of the mortgage broker is to find you a lender with the terms and rates that will best suit you.
- Mortgage Life Insurance
- Mortgage life insurance gives coverage for your family, if you die before your mortgage is paid off.
- Mortgage Lender
- A mortgage lender is an institution (bank, trust company, credit union, etc.) that lends money for a mortgage.
- Mortgage Loan Insurance
- Mortgage loan insurance is required for residential mortgage loans with a loan-to-value ratio of more than 80%, and is available from CMHC or a private company. Because mortgage loan insurance protects the lender against losses in the event that a borrower fails to pay his or her mortgage, it enables more Canadians to purchase their home earlier, at competitive interest rates and benefit from the growth in home equity sooner.
- Mortgage Payment
- A regular payment to the lender that includes both the interest and the principal.
- Mortgage Term
- Length of time that the mortgage contract conditions, including interest rate, is fixed.
- New Home Warranty Program
- Coverage in the event that an item under the warranty needs to be repaired within the specific warranty period.
- Open Mortgage
- A flexible mortgage that allows you to pay part before the end of its term.
- Operating Costs
- The expenses that a homeowner has each month to operate a home. These include property taxes, property insurance, utilities, telephone and communications charges, maintenance and repairs.
- Payment Schedule
- The monthly, biweekly, or weekly mortgage payments.
- Often, developers will plan, sell and execute the construction of residential communities in phases. In communities where a large number of homes will ultimately become available, phasing allows developers to get homebuyers into their new homes in a realistic timeframe.
- Possession Certificate / Inspection Form
- is a certificate that’s signed by the new homeowner, after the possession inspection, to approve the completion of the home and note any final deficiencies.
- Pre-Delivery Delivery
- Approximately one week prior to your closing date, a Minto Warranty Inspector will meet with you at your new home and offer useful maintenance tips including information about the operation of mechanical features, general maintenance and will confirm that your finishing selections are correct. Your Inspector will also record any deficiencies that you may find, for follow up.
- The additional value of a given home or lot with desirable attributes (i.e. larger lot, proximity to a park). See also ‘CMHC Insurance Premiums’.
- The amount that you borrow for a loan (not including interest).
- Principal, interest, taxes and heating — costs used in both the Gross Debt Service ratio (GDS) and Total Debt Service ratio (TDS) calculations.
- Property Insurance
- Insurance that you buy for the building(s) on the land you own. This insurance should be high enough to pay for the building to be re-built if it is destroyed by fire or other hazards listed in the policy.
- Property Taxes
- Taxes charged by the municipality where the home is located, usually based on the value of the home. In some cases the lender will collect a monthly amount as part of the mortgage payment to cover your property taxes, which is then paid by the lender to the municipality on your behalf.
- Purchase Agreement
- is the contract signed by the builder and buyer to secure the purchase of a lot and new home construction.
- Real Estate
- Property consisting of buildings and land.
- Realtor or Real Estate Agent
- A person who acts as an intermediary between the seller and the buyer of a property. A Realtor is not required to purchase a home from Minto Communities.
- Registration (Condominium)
- The point in time when the developer has met all the requirements to transfer ownership of the suites to the homeowners and the condo corporation that will maintain the building thereafter.
- Reserve Fund (condos)
- A fund required to be set up by the condominium corporation for major repair and replacement of common elements and assets of a corporation. This amount is set aside by the homeowner on a regular basis so that funds are available for emergency or major repairs.
- Retaining Walls
- Used to limit the grade change, or slope, along a rear yard and/or side yard, as applicable. Retaining walls are typically installed on the high side.
- Single-family detached home
- Free-standing home for one family, not attached to a house on either side. Single Family Homes come in a variety of sizes and styles, on different sized lots (i.e. 30’, 36’, 43’ wide)
- Semi-detached home
- Home for one family, attached to another building on one side.
- Statement of Adjustments (SOA)
- A document prepared at the time of closing, that sets out the purchase price, credits the deposit, and prorates any prepaid items such as property taxes.
- Survey or Certificate of Location
- A document that shows property boundaries and measurements specifies the location of buildings, fences, and other improvements on the property and states easements or encroachments, at a specific point in time.
- Tarion Warranty Corporation
- The regulator of Ontario’s new home building industry, Tarion enrolls new homes for warranty coverage, deposit insurance, investigates illegal building practices, resolves warranty disputes between builders/vendors and homeowners, and promotes high standards of construction among Ontario’s new home builders. Tarion also works with the building industry to help educate new home buyers about their warranty rights, and about how to protect and maintain their warranty.
- Mortgage term is the length of time that the mortgage contract conditions, including interest rate, are fixed.
- A freehold title is an interest in land that gives the holder full and exclusive ownership of the land and building for an indefinite period. A leasehold title is an interest in land that gives the holder the right to use and occupy the land and building for a defined period.
- Title Insurance
- Insurance against loss or damage arising from a matter affecting the title to real property (e.g. by a defect in the title or by the existence of a lien, encumbrance or servitude).
- Total Debt Service Ratio (TDS)
- The percentage of gross income that will be used for payments of principal, interest, taxes and heat (P.I.T.H.) and other debt obligations, such as car payments or payments of other loans.
- Also called a townhouse or row house, a townhome is one unit of several similar homes, side-by-side, joined by common walls.
- Variable Mortgage Interest Rate
- Fluctuates based on market conditions but the mortgage payment remains unchanged.
- The seller of a property.