When the condition of ownership for a property becomes a burden or is troublesome to the owner, he or she may choose to become a nonpayer and abandon the property. In the event of “abandonment,” creditors can seek to recover their money as the property is no longer part of the estate.

When a judgment is made in a lawsuit, a court document is drafted that states how much the person who lost the lawsuit owes. This document can create a lien or a claim on property when it is filed with the country recorder where the property is owned.

An abstract of title is a historical account of all transactions conducted on the title to a specific property or piece of land. This title covers the property from the first sale to the present and is used by the title company to produce a title binder.

Mortgage documents may contain an Acceleration Clause to protect the lender in the event of a default. The clause enables the lender to make the entire principal amount of a mortgage due in the event of a default by speeding up the payment date.

Acceptance refers to the formal written approval when a property seller accepts the offer made by the buyer for purchasing the property.

An account agreement is a set of conditions that outline both your rights and responsibilities and those of the bank concerning your bank account. This agreement must be read, agreed upon, and signed before your account is activated.

Accounting method refers to how individuals or businesses keep their financial records. A common accounting method for both individuals and small businesses is the cash method, even though businesses with inventory are required to use the accrual method. See also “Accrual Method” or “Cash Method.”

Money owed by a business for goods and services provided without pre-payment.

Money owed to a business by purchasers who are not required to make a payment prior to receiving goods and/or services

The Accredited Mortgage Professional (AMP) is Canada’s national designation for mortgage professionals. Launched in 2004, the AMP was developed by CIMBL as part of an ongoing commitment to increasing the level of professionalism in Canada’s mortgage industry through the development of educational and ethical standards. Consumers should know that the AMP designation sets a single national proficiency standard for Canada’s mortgage professionals.
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In business accounting, the accrual method refers to reporting income in the year it was earned along with any expenses incurred, rather than reporting the income and expenses when payment is received or made. For example, if you renovated a basement and billed the customer in December 2004, the amount you charged is reported in 2004 as income even if the customer did not pay until the following year. Also, if you own a business that keeps an inventory, you are also required to use this method of business accounting.

To gather together an amount often over a period of time.

Interest which has already been earned, but has not yet been paid.

To receive credit for credit card transactions, merchants must have and maintain an account with an acquiring financial institution so that daily credit card totals can be deposited into the merchant’s account minus any fees owed to the acquiring financial institution.

Some leasing companies charge a fee for initiating the original loan. This is similar to mortgage lenders who charge additional percentage points as an origination fee. This fee is often not specified in a contract, but is included in the cost when calculating monthly payments.

A plot of land 180 by 242 feet is equal to one acre or 43,560 square feet.

An acre foot is equivalent to 325,851 gallons of material (water or other) that is needed to cover an acre of land one foot deep.

This term is generally used in insurance policies and refers an event caused by natural forces that results in damage to property. Natural forces can include hail, rain, tornados, lightning, floods, and earthquakes.

Active income refers to wages, tips, and profits from your business or employment that you partake in. It also includes portfolio income such as interest and dividends, but you cannot usually offset active income with passive losses. See also “Non-passive Income.”

The actual age (usually in years) of a structure since building was complete.This differs from effective age.

The monetary amount that a broker or dealer has invested in a used vehicle. This cash value is used for the purchase and repair of the vehicle.

A change, revision, or update made to a contract.

You can pay extra money in addition to your required loan payment to help pay off the principal loan amount faster. By making the extra payment, you also reduce the amount of interest paid.

A property that is owned by the person that is not being financed.

Interest that is calculated at the beginning of the loan and added to the principal amount owing. This means that the added interest must also be repaid, even if the loan is paid off early.

An “Adjustable Rate Mortgage” or ARM refers to the type of mortgage loan where the interest rate and monthly payments can be adjusted to rise and fall with market conditions. The interest rate and payments can be adjusted as frequently as once a month or you can adjust the principal loan balance or the loan term to reflect the rate change.

Some credit card companies use the “adjusted balance” method for applying finance charges. This means the credit card company will subtract all of the payments made during the month and then add the finance charges to the remaining balance.

“Adjusted Basis” refers to the amount used to determine profit or loss from a sale or property trade. To calculate this amount for an asset, take the original amount paid, add improvement and assessment costs, and then subtract deductions. Deductions can include down grading, depreciation, or depletion.

To calculate the “Adjusted Cost Basis,” take the amount paid for the item, plus the amount paid for improvements, and then subtract the losses and depreciation. The profit or loss is determined when the owner sells the item, and determines the difference between the sale price and the adjusted cost basis.

The period of time between interest rate changes in an adjustable-rate mortgage.

This refers to a person or persons getting title to a piece of property or land by simply using it without any objection from the legal title holder.

Using someone’s property without their verbal or formal written permission.

A sworn written statement that is authorized by an official such as a notary public or commissioner for oaths.

A type of credit card (usually Visa or MasterCard) that has an endorsement or sponsorship agreement with an organization, charity, or non-profit group in which a percentage of the sales transactions made using the card go to that organization. The logo or organization name is generally displayed on the credit card.

An agency generally exists because of a relationship between two parties where one party acts on behalf of the other. For example, an agent will represent a client and conduct transactions with a third party on that client’s behalf.

The use of a title company or agency to supervise the closing meeting where the property is transferred and mortgage is finalized.

A person who acts on behalf of another person (or client) when dealing with a third party transaction. In real estate, an agent is a person who conducts property transactions on behalf of sellers and buyers. The agent usually works on commission or for a pre-determined fee.

In the event of a dispute between neighbouring property owners, property lines or an agreed boundary can be drawn to settle the dispute.

A legally binding document that details the agreement between a property buyer and the property seller. This document specifies the agreed price and any other terms of the title transfer or sale.

Air Miles is a popular and recognized reward program that works with airline-affiliated co-branded cards. This means that the cardholder earns Air Miles (points) each time he or she uses the card. The earnings are then transferred on a monthly basis to the cardholder’s account and can be redeemed for flights, travel discounts, or other merchandise.

This clause stipulates that the borrower must pay the mortgage in full upon transfering the property.

Alimony is a monthly payment made to an ex-spouse usually as determined by the courts. If you are receiving alimony, payments must be received continuously for one year to qualify as income for a loan, mortgage or otherwise.

Money set aside by builders for amenities or services such as driveways, landscaping, carpeting, and fixtures. These amenities are usually standard, but they can have optional designs.

Money set aside by builders for amenities or services such as driveways, landscaping, carpeting, and fixtures. These amenities are usually standard, but they can have optional designs.

Money set aside by builders for amenities or services such as driveways, landscaping, carpeting, and fixtures. These amenities are usually standard, but they can have optional designs.

This tax primarily affects high-income taxpayers who shelter some of their income from taxation through certain tax preference items or deductions. It is often referred to as AMT. If your income meets the limit, then you have to recalculate your tax amount that is due based on the separate alternative minimum tax rates and tables.

When a home loan is not a standard fixed-rate mortgage, it is considered an alternative mortgage.

Amenities are features such as green space, playgrounds, community centers, shopping malls, or swimming pools that make a neighborhood or community more desirable for living.

Amortization refers to the process of gradually paying down the principal of a loan. Each payment toward the principal reduces your loan by that amount. This is different than an interest-only loan payment where the principal balance is never reduced. Amortization for a mortgage loan in Canada is normally 25 years, but can be as few as 5 years.

A schedule or table that details the life of the loan or the amortization. This schedule includes the principal amount owing at the origination of the loan, period payments, interest paid on each payment, principal reduction on each payment, and the final balance. CanEquity has created a mortgage rate calculator to generate a sample amortization schedule to give clients a better understanding of how amortization works.

A mathematical formula used to calculate monthly mortgage payments based on the borrowed loan amount, the interest rate, and the loan term.
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The period of time that is required and agreed upon to repay (amortize) an entire mortgage loan.

An amoritized loan is a loan where the interest and principal are both paid off in their entirety through a series of scheduled payments over a specified amount of time.

When leasing a vehicle there are generally costs associated with the transaction and payment is due before the customer can take possession of the vehicle. Such costs can include a security deposit, title fee, capitalized cost reduction, monthly payments paid at signing, and registration fees.

The amount financed refers to the principal amount that is borrowed. This amount can include the entire purchase cost along with any other items incorporated into the payments.

Those private individuals with capital to invest in business enterprises are often called angels.

Banks and credit lenders generally charge an annual fee for the use of a credit card levied each year. Annual fees can range from $15 to $300, and are billed directly to the customer’s monthly statement. Many credit cards are now offering incentives to customers by getting rid of annual fees to make the cards more appealing.

An annual report or statement sent to the borrower which details the remaining principal amount owing on the loan and the amount paid in taxes and interest for the previous year.

A yearly interest rate that includes fees and costs paid to obtain the loan. Lenders are required by law to disclose this interest rate. The rate is calculated in a standard way, taking the average compound interest rate over the loan term, 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.

The percentage disclosed on interest-bearing deposit accounts that reflect the total interest to be earned based on an institution’s compounding method, assuming funds remain in the account for a 365-day year. This disclosure is required by Truth in Savings regulations.

A periodic payment made to a policy holder by an insurance company for a certain length of time.

In a contract, when one party reneges on the agreement, the other party is notified and is no longer responsible for fulfilling their end of the agreement.

A document or form that is filled out by a prospective borrower to qualify for a loan. The application requires the borrower to provide detailed information about his or her financial situation.
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Lenders charge a fee to process the application or document as filled out by a prospective borrower to qualify for a loan. The application generally details the financial situation of the borrower and must be reviewed before a loan decision can be made.

A market value estimate for a parcel of real estate that is made by a competent professional who is knowledgeable about local real estate prices and market trends.

A cost charged by professionals who are hired to offer educated opinions about the monetary worth or value of a property.

A detailed evaluation a property’s value that is typically conducted by a professional. The report is then based on an inspection of the property and a review of nearby, comparable properties along with their values.

An educated opinion or estimate regarding the value (monetary worth) of a property.

A person who is qualified by education, training, and work experience to estimate the value of real and personal property

Appreciation refers to the increase in the value of a property or item over time.

An assessment or judgement made by a lender regarding the ability of a borrower to repay a mortgage loan. Being approved also helps the borrower when home shopping because the lender will confirm the amount the borrower can obtain to purchase a home.

A method used to resolve disputes that requires an impartial third party to make a reasonable and fair decision for all parties involved. The impartial third party must be agreed upon by all sides involved in the dispute before a decision can be made

A person who designs structures and buildings.

Fees paid to a person who designs structures or buildings.

An area equal to approximately 0.845 acres. This measurement was traditionally used in France, Quebec, and Louisiana. Today, hectares and acres are more commonly used to measure area.

The buyer makes the purchase at his or her own risk.

A fire-resistant element that once was commonly used for insulation in buildings, but was discovered to cause health issues in the lungs. This material is no longer used and is typically removed from buildings when it is discovered.
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The amount of money the seller requests for the property or item. This is not the same as the appraised value.

The government (local, provincial, or state) provides an assessed value of a property’s worth for tax related purposes.

Assessment rolls are simply lists of taxable property.

Local or special taxes that are imposed upon properties that have or will benefit from an improvement made in the area.

Any item or possesion of monetary value that is legally owned by a person. Assets can include real or personal property, and enforceable claims against others including bank accounts, stocks, mutual funds, etc.

A bankruptcy proceeding where there are non-exempt assets that might be accessible to pay creditor’s claims.

Assignment refers to the transfer of a mortgage from one person to another person.

A person who transfers property to another person.

The ability of a mortgage to be taken over from the original borrower by a new borrower.

A loan or obligation that can be taken over from the original borrower by a new borrower.

An existing mortgage that can be taken over or “assumed” by the buyer from the seller when a property is sold.

A provision in a mortgage contract that enables the buyer to assume or take responsibility for the existing mortgage loan from the seller.

Lenders will charge a fee to update mortgage records when a buyer assumes an existing mortgage from the seller.

A fee charged for an account holder to access the ATM system and conduct banking activities such as cash withdrawls. This fee is charged in addition to any individual account fees already paid by the account holder to their financial institution. See also “Automated Teller Machine.”

An alliance between banks and/or credit unions that is designed to avoid or minimize surcharges for non-bank customers at ATM machines. Customers from one bank that belongs to the alliance can use surcharge-free ATMs at all alliance banks. See also “Automated Teller Machine.”

This is not a debit card fee. It can be an annual or monthly fee charged on top of individual account fees to obtain an ATM card. The fee may also be charged per card or per account. For example, if an account is held jointly, the bank may charge for the second person to hold a card or it may charge one fee for all the cards on an account. See also “Automated Teller Machine.”

A fee charged to someone using a bank-owned ATM because he or she does not hold an account with that bank. It is a good idea to review what your bank charges you to use another bank’s ATM system to avoid paying additional surcharges to your bank. See also “Automated Teller Machine.”

An examination of a taxpayer’s income tax return or other transactions bearing tax consequences. Audits range from a simple letter from the agency to a detailed review of individual or business tax filings and records.

An authorized user is a person with permission to use a credit card account belonging to someone else. The card bearer is the one who must grant the permission for use.

See “Automated Teller Machine (ATM).”

An interactive terminal that allows customers with valid accounts from either a banking or other financial institution to conduct various transactions including money withdrawals, deposits, bill payments, and transfers. Customers require a magnetically encoded card and P.I.N. (personal identification number) to use the terminal and may be subject to a surcharge. These terminals are interconnected to allow customers access to their accounts from anywhere in the world.

An agreement giving authorization to various companys or lenders to make specified withdrawals from a person’s bank account to make payments towards bills or loans. For example, regular monthly payments such as car or mortgage payments can be set up to automatically be withdrawn from your account each month or as specified in your authorization agreement.

The average yield per year over the life or term of the investment, assuming all principal and interest remain on deposit until maturity.

The method used by most credit card companies to calculate your due payment. 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.

The average tax rate is the real rate of taxes paid after taking federal tax brackets into account. There are different tax rates for different income levels; 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.

An agreement granting the right to fly airplanes over property, even if doing so causes damage, inconvenience, or loss of property value to the property owner. This type of agreement usually restricts the property owner from building or growing anything over a defined height.

A letter or document from the title insurance company that specifies the condition of the title. The letter is generally given to the lawyer involved in the real estate transaction.

Another offer or bid for a property to be considered by the property seller if the current offer falls through.

Money that cannot be collected is considered bad debt. Businesses can deduct bad debts under certain circumstances. If a bad debt is personal, it can also be deducted in some instances as a short-term capital loss.

The amount of money in your account.

A report of financial standing which includes assets, liabilities, and net worth of an individual.

Transferring or moving an unpaid credit card debt from one credit card company to another. Credit card companies will sometimes offer lower interest rates to encourage balance transfers to their company, but they will also charge transfer fees to discourage their customers from leaving.

A fee charged to customers when transferring outstanding balances from one credit card to another credit card. Customers generally transfer outstanding balances to obtain better interest rates.

This type of loan is not designed to be repaid in full through periodic payments at the end of the loan term. When the term ends, a balloon payments is due. This means that one larger payment is made to pay off the remaining principal.

This type of loan requires the borrower to make regular monthly payments which amortize over a specified term, but at the end of that term a final payment or large lump sum (balloon payment) must be made to pay off the remaining principal. The typical term for a balloon loan is 10 year.

A payment or installment that is made at the end of a specified loan term to pay off the remaining principal. This payment is larger than the regular payments that are made throughout the term of the loan.

A financial institution in which money is kept for saving or commercial purposes or is invested, supplied for loans, or exchanged

A company that owns or controls one or more banks or companies associated with banking activities. Holding companies can include leasing companies or credit companies and are often identified by having either Bancorp or Bancshares in the company name. All bank holding companies are regulated by the Federal Reserve Board of Governors.

Bank spread refers to the difference between the interest rate in which a bank charges a borrower and the interest rate the bank pays a depositor.

An electronic money transfer system used to move funds between banks

The financial status of an individual or firm that has been legally judged either to have debts that exceed assets or to be unable to pay bills. The individual or firm can declare bankruptcy voluntarily or be pressed by creditors to do so. The debtor’s remaining property and assets are then administered for the creditors or distributed among them.

A private third party or company that is appointed to initiate bankruptcy proceedings for an individual or firm that is subject to a bankruptcy

A bargain sale refers to purchasing a property or an item for less than the market value.

The cost of a vehcile without any extra options such as power windows, air conditioning, etc. The base price simply includes standard equipment and the manufacturer’s warranty.

Also referred to as cost basis. Cost basis is the monetary value assigned to an asset from which a taxpayer determines capital gain or loss. For assets purchased, the basis is the price paid by the purchaser. Special rules apply to assets acquired through gift or inheritance, as well as to the value of stock funds held for a period during which earnings are reinvested.

A basis point is a measurement of a percentage: 1/100th of one percent. For example, the difference between a 9.0% loan and a 9.5% loan is 50 basis points.

A wall or the side of a structure that supports a roof or offers integrity to other parts of the structure.

A suburb in which most residents live, but do not work. These people commute to the city to work.

A person’s income or earnings before income taxes are paid.

A person who is legally named to benefit from an insurance policy, will, deed, or trust.

An improvement, addition, or replacement to a property that increases the value.

A bidding war can occur when multiple buyers are interested in purchasing a single property. Competing offers will likely cause the price of the property to escalate resulting in larger profits for the seller.

A legal agreement or contract where both parties involved agree to give each other something. For example, in a property purchase agreement the buyer pays money to the seller and the seller then transfers the property to the buyer. This is a bilateral contract.

Written proof in the form of a receipt or document that serves as confirmation for the transfer of title to personal property.

An online system that allows customers to receive and view bills electronically via computer. Customers can then pay the bills electronically by transfering funds from their accounts to the creditors seeking payment.

The amount of time between the last statement date and the current statement date.

A monthly bill that is sent by a creditor to the customer that provides a summary of the activity on an account. This can include balances, purchases, payments, credits, and finance charges.

An agreement with the seller from a potential buyer to consider the purchase of a property. The agreement is secured and backed by a cash deposit as a declaration of good faith on the part of the buyer.

A mortgage loan that requires payments every two weeks instead of one standard monthly payment. Each 26 biweekly payment is equal to one-half of the standard monthly payment. Making biweekly mortgage payments is advantageous to the buyer because it results in a substantial reduction in interest payments because the mortgage is paid off quicker.

The account holder has filled out the cheque with all the required information (including a signature), except for a dollar amount.

An insurance policy that covers common areas of a co-op, condominium, or neighborhood governed by a homeowner’s association. This type of policy does not cover the actual structures or their contents. The policy only covers areas that are owned in common by the individual owners.

A mortgage that covers more than one property owned by the same buyer.

A mortgage that covers more than one property owned by the same buyer.

A neighborhood that is run-down and unestetically pleasing.

This term refers to the Kelley Blue Book which is an industry guide used by dealers to estimate wholesale and retail vehicle prices. The books are issued by many organizations, and are commonly available on the Internet or in the reference sections of public libraries. It is important to note that the books are not always blue in color.

A contact print of a drawing or other image rendered as white lines on a blue background. A blueprint is generally a print of an architectural plan or technical drawing and is often used for construction purposes or obtaining permits.

A measurement of lumber that is equal to 1 inch thick, 1 foot long, and 1 foot wide.

The standard and routine jargon used in legal documents.

Characterized by good faith and lack of fraud or deceit. In real estate, a bona fide purchaser or seller has the legal right to give or receive title.

A certificate of debt issued by a government or corporation guaranteeing payment of the original investment plus interest by a specified future date.

The value or monetary worth of a property, item, or company as a capital asset based on its cost plus any additions, subtracting depreciation.

A way to make an exchange of property equal. For example, if you trade in a work vehicle for a new model, the cash you pay on top of your trade in is called boot. Property or assets can also be considered boot because it does not always have to be cash to make an exchange equal.

1. To be approved and obtain a loan of money. 2. Sand, gravel, or other material used for grading.

A hole from which topsoil, gravel, or other material is removed for use in a construction project.

The person who obtains the loan.

The line that divides or acts as a legal border between adjacent properties.

A “breech of contract” refers to a failure to abide by or comply with the terms of a legal agreement without a legal excuse.

A ” breach of covenant” refers to a violation of a promise made in a contract or property deed.

A certainty that a seller cannot pass clear title of property to a buyer.

When a person’s expenses match their income or savings then they are said to have reached the break-even point. In home finance, the term can refer to the amount of time it takes to regain the costs of refinancing a loan or paying discount points.

A loan that “bridges” the gap between the purchase of a new home and the sale of a current or existing home. The current home is used as collateral and the bridge loan is used to pay closing on the new home before the current home is sold. Some bridge loans are structured to completely pay off the existing mortgage at the bridge loan’s closing, while other variations of the loan add the new debt to the old debt. Bridge loans usually come with six month terms.

A person or firm who acts on behalf of another. For example, a mortgage broker works on behalf of a client to find the best mortgage rate possible for the client.

This term means that a property is ready to be cleaned and painted, but it does not mean immaculate or spotless.

A computer software application used for accessing and viewing Internet Web sites. There are many different types of browsers available and two of the most common include Microsoft Internet Explorer and Netscape Navigator.

This refers to a parcel or stretch of land that separates two pieces of property.

Refined features or materials that are offered by the builder for an extra charge. These features allow home buyers to upgrade materials or add personal touches to their home instead of using the base (economoical) materials and features chosen by the builder.

A financial institution that is designed to help members finance property purchases and real-estate transactions.

“Building code” refers to the regulations and guidelines that govern design and all materials used in construction.

A local civil servant who enforces the building code as determined by government standards. It is the building inspector’s responsibility to ensure that construction and renovations are up to code.

A temporary halt or permanent stop to construction.

A temporary halt or permanent stop to construction.

A permit issued by a local government giving authorization to construct a building or repair an existing structure.

Local governments impose certain regulations and restrictions on the size and height, building materials, colours, uses, locations, placement, and other characteristics of commercial and residential buildings or structures.

Items that are permanently attached to a dwelling or building are considered “built-ins”. Such items can include appliances, cupboards, shelving, etc.

When a market is thriving and stock prices are being driven up, this is called a bull market. When stock prices fall and the market turns poor for investors, then it is called a bear market.

An owner is given a legal set or bundle of rights over their property.

To win a lawsuit, those involved must provide enough evidence to make their case. This is a legal requirement. In civil cases, such as tax court, the burden of proof is decided by the the most evidence. Except in cases of tax fraud, the burden of proof in a tax case generally is on the taxpayer.

To win a lawsuit, those involved must provide enough evidence to make their case. This is a legal requirement. In civil cases, such as tax court, the burden of proof is decided by the the most evidence. Except in cases of tax fraud, the burden of proof in a tax case generally is on the taxpayer.

This type of bankruptcy occurs when business related debts cannot be paid and the business or individual defaults or files for bankruptcy. The debtor can be a business or an individual involved in a business.

This type of bankruptcy occurs when business related debts cannot be paid and the business or individual defaults or files for bankruptcy. The debtor can be a business or an individual involved in a business.

Interest acquired in business operations can be deducted as a business expense.

A type of mortgage loan where the lender charges below-market interest in exchange for discount points.

The option of buying a lower mortgage rate. The borrower “buys down” the interest rate on a mortgage by paying discount points when the loan is first initiated. It can also be a mortgage where an initial lump-sum payment is made to temporarily reduce a borrower’s monthly payments during the first few years of the mortgage.

An individual who is paid a commission from a buyer to find a property and to assist with the negotiations involved with closing the real estate transaction.

Laws or rules that govern the internal affairs of an organization or a city. Bylaws are often considered to be secondary laws.

A mortgage clause that provides the lender with rights to request the remaining balance of a mortgage at any time.

A crown corporation that provides deposit insurance for protection against the loss of deposits made with other member financial institutions.
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A federally introduced program in which the Government will invest, in the form of grants, with parents who save for their children’s education through Registered Education Savings Plans (RESPs). The government will add to contributions made by parents to an RESP by 20% up to a yearly maximum of $400 per beneficiary.

A bond issued by the Canadian Government as a safe method for Canadians to aquire savings. The bonds, which are a form of debt, can be cashed with proper identification at any time through most Canadian financial institutions.

A professional industry association that provides information, research, advocacy, education and operational support services primarily to the banking industry.
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An agency responsible for the automatic processing and clearing of all securities transactions in Canada.
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An association that operates a national clearing system for financial institution payments. This association is comprised of several financial institutions in conjuntion with the Bank of Canada.
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A precaution or provision in a lease or contract that details the conditions under which the parties involved can terminate the agreement.

The upper most limit on the amount the interest rate can increase during a single time period of an adjustable-rate mortgage. Every ARM has two caps: a periodic cap, which limits the periodic changes to the interest allowed in the loan agreement, and a lifetime cap, which governs the total increase that can be imposed during the life of the loan.

Wealth in the form of money or property that is used to make money or that is accumulated in a business by a person, partnership, or corporation.

A ratio of total capital divided by risk-weighted assets and risk-weighted off-balance sheet items. A bank is expected to meet a minimum capital ratio of 8.0% unless a higher ratio is specifically prescribed by the Superintendent of Financial Institutions.

An item that is owned for investment or personal reasons. Such items can include stocks, bonds, collector cards, or even stamp collections. When you sell a capital asset, depending on the price, you earn a capital gain or a capital loss. Capital gains are taxed at a special rate, and losses can be used in many cases to reduce the amount that is taxed. See also “Capital Gain” or “Capital Loss.”

The cost of making an improvement or renovation to a property.

When the fund sells some of its assets, you receive capital gain distributions or a portion from the sale. This distribution is regarded as a capital gain, not as ordinary dividends such as the interest gained from a bank account. It is important to separate capital gain distributions from ordinary dividends because capital gains are taxed more favourably. See also “Ordinary Dividends.”

The difference between the price paid for an investment and the price at which it is sold. In simple terms, it is either a profit or loss on the investment. Equity and growth funds are two types of investments that earn capital gains or losses.

The profit made by the seller when real estate or other capital assets are sold. Capital gains are taxed more favourably than earned income. However, this can be dependent on your tax bracket and the length of time you owned the asset before it was sold. You could pay approximately one-third to one-half less tax than you would pay on the same amount of earned salary. See also “Capital Asset.”

A tax on the profits from the sale of real estate or investments.

Any permanent structure or asset that is added to a property in order to increase the property value.

Funds that are used to buy permanent fixed assets for a business. This might include machinery, land, or buildings as opposed to those expenses incurred on a day-to-day basis.

When an asset is sold for less than what you paid, or less than its adjusted basis, it is a capital loss. However, when it comes to taxes a capital loss is not always bad because you can use it to reduce the amount of income being taxed by the amount of the loss, up to $3,000 per year. If your loss is more significant, the excess (or capital loss carryover) can be carried forward indefinitely until the total loss is used.

An estimate of the value of a rental or commercial property using the rate of return on investment and the property’s annual net operating income.

An estimated percentage rate of return that a property will produce on the owner’s investment.

A leasing term that refers to the price of the vehicle. This cost is negotiable and can be reduced by a cash down payment, trade-in, or a manufacturer’s rebate. The lower the capitalized cost, the lower the monthly lease payment. This cost can also be increased by the loan acquisition fee or any costs that remain from a previous lease.

A finance company that is connected to a certain dealer or manufacturer.

A caravan is when a group of real-estate agents go out together to look at properties recently listed for sale.

A written agreement or contract between a credit card holder and the credit issuer that details the terms and conditions of a credit card account. This agreement must include the Annual Percentage Rate, the monthly minimum payment formula, the annual fee if applicable, and the cardholder’s rights in billing disputes. Changes to the agreement can be made at any time by the issuer with prior written notice.

An open-sided shelter used for vehicles, usually formed by a roof projecting from the side of a building.

A fee charged by the bank for using credit cards to withdraw money generally from an ATM or banking machine. This fee can be a flat fee per transaction or a percentage of the amount being advanced. For example, the fee may be set as: “2% / $10″. This means the cash advance fee will be the greater of 2% of the cash advance amount or $10. Banks often limit the fee to a certain dollar amount.

Cash cards contain a pre-set dollar amount that can then be used to purchase goods and services at participating retailers who have special cash card readers. The cash card reader extracts the value of the purchase from the card and adjusts the remaining balance for future use. For example, many retailers offer gift certificates in the form of cash cards to be used at their establishment. It is important to remember that these cards are like cash with no built-in security, so anyone can use them.

Cash or cash equivalents, such as securities or documents of title, as specified in the Bankruptcy Code in which both the estate and another party have a vested interest.

The amount of money (after expenses are subtracted) that is generated by an investment or a business during a specific time period. One measure of cash flow is earnings before interest, taxes, depreciation, and amortization. Cash flow is often considered to be a company’s most important financial statistic because money drives business.

An estimate of time and the amount of money that will be received and paid out of a business. The cash flow forecast typically records cash flow on a month-by-month basis for a two year period.

The form of accounting used by most individuals where income is reported in the year it is received, but expenses are deducted in the year that you pay taxes. For example, if you remodel a kitchen and bill the client in December 2004, but do not receive payment until January 2005, the funds are counted as income in 2005 and not when the work was done in 2004.

This type of refinance is when a borrower takes out a new loan on their existing property, but the new loan amount is greater than the amount of the original mortgage. The difference is then taken out in cash.

A loss of property or life caused by a sudden, unexpected, or uncommon event. Hurricanes, earthquakes, fires, floods, or thefts are just a few examples of events that can cause casualty and theft losses. A portion of these losses can be used as an itemized deduction.

A charge or instrument placed on land title. A caveat is also a formal notice filed with a court or officer to suspend a proceeding until the person who filed the caveat is given a hearing.

Written permission or authorization by a local government for an individual or individuals to live in or occupy a newly constructed or renovated building.

After legal confirmation, an affidavit is issued at a judicial or tax sale to the buyer of a property. The buyer is then entitled to the deed of the property.

A written document which validates the title to a property. This means the property is legally vested in the present owner.

Legal records that track the ownership of a property from the most recent owner to the original owner.

The scheduled time period in which an adjustable-rate mortgage changes.

A written formal document that details any alterations made to construction plans.

Financial institutions that are regulated under the Bank Act. Chartered banks are designated as Schedule I or Schedule II depending on their ownership.

An article of movable personal property.

A loan that is certified by movable personal property such as a mobile or trailer home.

A book containing blank forms known as cheques. Cheque books are generally issued to individuals who hold chequing accounts.

A book containing blank forms known as cheques. Cheque books are generally issued to individuals who hold chequing accounts.

When you write a cheque to a person or a company, the cheque is typically cashed when deposited into a bank account. Your chequing account is then debited for the amount of the cheque and the cheque is said to have “cleared.”

The length of time that a financial institution can legally hold a cheque before crediting a customer’s account balance and allowing the customer to use the funds.

A blank form that is used as a written order directing a bank or banker to pay money as therein stated. Cheques can be personalized or non-personalized.

A book or log where you can record the details of every transaction made in your chequing account.

Cheques that are cancelled are returned to the account holder in a monthly statement.

Child support is paid on a monthly basis by one parent to another to assist with the care of a child or children. Child support is usually paid as a result of divorce or separation. Such payments must be received continuously for one year to be considered as income to qualify for a loan.

A tax break for those who claim eligible dependent children on their tax returns.

1. An electrical device used to turn power off and on in sectors of a building and to limit the flow of electricity through a circuit for safety purposes. 2. In taxes, a circuit breaker is a tax credit that reduces property taxes for the elderly and permanently disabled. The credit is dependent on the amount of income earned which means the more you make, the lower the credit.

A creditor’s demand for something due usually a payment from a debtor or the debtor’s property. A claim can also be a demand for payment in accordance with an insurance policy or other formal arrangement.

A brand name for the standard card that is issued by VISA.

A municipal government’s levy on real estate that varies depending on the use of the property. Commercial property is typically taxed more heavily than residential property where a classified property tax exists.

A title that is not burdened by liens or legal questions is considered to be clear.

A process within the banking system that allows banks to collect or pay out for items drawn on or paid into accounts within their institution. This process enables banks to accept cheques and bank drafts from other financial institutions for deposit. The Canadian Payments Association operates Canada’s clearing system.

Bank clients can use a money management software application on their personal computers to access their bank accounts using a modem and a phone line. Clients are then able to conduct bank transactions from the comfort of their own homes.

A mortgage product that has a strict repayment schedule. Payment amounts are pre-set with optional limited lump sum payments and payment increases as detailed in the loan agreement.

The bank may charge customers a fee for closing accounts, especially if the account is closed before a pre-determined length of time.

The most common type of car lease. The lessee may return the car at the end of the lease term, pay any end-of-lease costs, such as the disposition fee, and the lease agreement is over. In a closed-end lease, the lender assumes the risk of predicting the value of the vehicle (its residual value) at the end of the lease’s term. Closed-end lease payments are somewhat higher than open-end lease payments.

Schedule II banks may be closely held meaning that one party or owner can hold more than 10% of the outstanding shares. Schedule I banks are prohibited from this type of ownership.

In real estate, the closing refers to the completion of the real estate transaction. Before closing can occur, there are a number of things that must happen. For example, the deed must be delivered to the buyer, the money must be transfered for the purchase price, the notes must be signed, and the closing costs must be paid in full.

The various costs or expenses associated with closing a real estate transaction. Such costs can include paying for title insurance or appraisal fees. It is important to remember that these costs are over and above the purchase price of the property.

A claim on or against the title to a property that could decrease the ability to transfer ownership of the property to a buyer.

A declaration made by a local government which stipulates the population density of a planned development. The developer is allowed to use discretion and make some areas of the development more densely populated than other areas.

CMHC is an acronym for the Canadian Mortgage and Housing Corporation. This Federally run institution provides banks and lenders with mortgage insurance (which is not the same as life or property insurance). If a borrower defaults on their mortage loan or there is a foreclosure on the property, CMHC assumes responsibility and reimburses the bank or lender the entire mortgage amount. This insurance is typically required when a borrower has less than 25% equity or down payment and it must be paid in advance (or it can be added to the mortgage). See also “G.E. Capital.”
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The most common type of co-branded credit cards are those issued by banks in partnership with other retail companies. For example, General Motors, Shopper’s Drug Mart, and Starbucks all offer co-branded credit cards where their names appear on the card with the name of the issuing bank. Retailers often form these partnerships to attract clients by offering special shopping incentives if you use the card. Many of these cards, especially those affiliated with airlines, charge high annual fees because of their popularity among consumers.

An agreement within a residential building where each unit has access to a shared or common space. The common space typically includes kitchen facilities, a dining area, laundry facilities, and even recreation space. This type of living arrangement is also refered to as cohousing, cooperative housing, or community housing.

An insurance policy that allows the insurer and insured to share costs incurred after the deductible is met.

Property that is accepted as security for a loan or other financial obligation.

The efforts used to bring an overdue mortgage, or other debt current, and the filing of necessary notices to proceed with foreclosure when necessary.

A private and fraudulent agreement made by two or more parties to purposely defraud others.

An individual who co-signs a promissory note. In doing so, the co-maker is responsible for the loan if any of the other co-signers back out or renege on their promise to repay the loan.

An account that offers the benefits of both savings and chequing accounts. You can write cheques and be paid interest if you have sufficient money in the account.

The connection between the unpaid principal balances of all the mortgages on a property (first and second usually) and the property’s appraised value (or sales price, if it is lower).

A financial institution that provides a wide range of services to its customers. Such services can include chequing and savings accounts, business loans, and credit cards.

Commercial banking centres serve small to medium-sized businesses such as franchising, leasing and cash management services.

Unsecured notes issued by companies that mature within nine months. Generally, commercial paper is issued only by the larger and more credit worthy companies.

A parcel of land in a district that is zoned strictly for business.

Lumping together money from different sources so the sources cannot be distinguished.

A fee paid to an agent for negotiating a real estate or loan transaction, often expressed as a percentage of the property selling price.

A written agreement from a lender promising to lend money on certain terms for a specified time period.

A fee paid by a borrower to a lender who promises to lend money on certain terms for a specified time period.

A formal document supplied by a lender to a home buyer that details the terms under which the lender will lend money to the home buyer. Also known as a “loan commitment.” This letter indicates the contingencies that must be cleared prior to funding the loan.

A levy against individual unit owners in a condominium or planned unit development to pay for upkeep, repairs, and improvements to the property’s common areas, such as hallways, elevators, parkades, swimming pools, and gym facilities.

Areas of a building or land and the amenities owned (or managed) by a planned unit development, or condominium project’s homeowners’ association, or a cooperative project’s cooperative corporation that are used by all of the unit owners who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common hallways of buildings, parkades, means of ingress and egress, etc.

A system of jurisprudence based on judicial precedents rather than statutory laws. Common law originated in the unwritten laws of England.

A housing area where the owners belong to a homeowner’s association that owns and maintains all common areas.

A bank that is locally owned and operated, but is not part of a bank holding company. Also referred to as an independent bank.

Possessions, real estate, and profits that spouses (husband and wife) acquire during marriage, excluding gifts and inheritances, are considered community property. In the event of divorce, community property is divided equally between spouses.

Refers to “comparable properties,” that are used for comparative purposes in the appraisal process. Comps are recently sold properties that are similar in size, location, and amenities to the property being sold. Comps help an appraiser determine the fair market value of a property.

An approach for estimating the value of a property by comparing the sales prices of similar properties that have recently sold.

Legally qualified or fit to perform an act. Able to distinguish right from wrong and to manage one’s affairs.

Interest that is calculated by adding the interest earned in the current period to the principal and figuring the next period’s interest on this “compounded” total amount.

Used in Bank rate tables. These include: S–Simple interest. A–Compounded annually. H–Compounded semi-annually. Q–Compounded quarterly. M–Compounded monthly. D–Compounded daily.

The act of condemning (as land forfeited for public use) or judging by a government to be unfit for use.

A promise made by a lender to give a loan if the borrower meets the specified requirements.

A structure containing two or more housing units. The interior space of each unit is individually owned while the remaining property (land, building, and other amenities) is owned in common by all the owners of the individual units.

When an existing building such as a rental project changes to the condominium form of ownership.

After approval is given, all of the debtors’ pre-petition debts are eliminated as provided by the plan.

A mortgage that is eligible for purchase or securitization by one of the government-sponsored enterprises such as Fannie Mae, Freddie Mac and Ginnie Mae. Requirements include size of the loan, type, and age.

The legally binding approval given by a judge that pertains to a written agreement by the parties of a lawsuit.

1. Something promised, given, or done that has the effect of making an agreement a legally enforceable contract. 2. A factor to be considered in forming a judgment or decision.

The total sum of money allocated for a particular purpose. In construction, the money that is set aside for building a structure.

A short-term interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work advances towards completion.

A loan that finances the construction, then for a long-term, traditional mortgage, as distinct from a construction loan followed by a separate mortgage loan.

The idea in which a taxpayer does not actually have to take possession of money for it to be taxable. An example of this is when savings account interest is reinvested rather than sent to the account holder as a separate payment. In this case, the account holder constructively received the interest because the earnings were credited to his account and could have been taken out at the owner’s discretion. As such, the earnings are taxable.

A bankruptcy case that is filed to reduce or erase debts that are primarily consumer debts.

Loans for personal use as opposed to business or commercial lending. These loans are typically unsecured and not backed by collateral.

A service that offers counselling for creating a realistic budget and a debt repayment plan. The service also offers advice for working with creditors to ensure that debts are paid back over a certain time.

Debts incurred due to personal needs as opposed to business reasons.

An index that measures movements in the average price of products and services typically consumed by Canadian families.

Parcels or pieces of property that are located next to each other.

A condition that must be met before a property sale can be completed, such as a home inspection or mortgage approval.

1. An agreement between two or more parties, especially one that is written and enforceable by law. 2. In real estate parlance, the contract is the legal document by which buyer and seller make offers and counteroffers for a piece of property. The real estate contract describes the property, includes or excludes items in the property, names the price, apportions the closing costs between the parties and sets forth a closing date. When buyer and seller agree on terms and sign the same document, the property is said to be “under contract.” More formally known as agreement for sale, purchase agreement or earnest money contract.

An agreement for the sale of property where the buyer takes possession while making payments, but the seller holds title until full payment is received. Also called a land contract.

A document used by a property buyer and seller to approve the price and other terms of the transfer of title. Also known as an agreement of sale, a purchase contract, or a sale contract.

An individual that agrees to furnish materials or perform services at a specified price, especially for construction work.

A legal claim against property as a result of a voluntary contract, such as a mortgage.

Restrictions set by a local government to control the amount, type, and density of new construction within a certain area.

A mortgage that is not insured or guaranteed by CMHC or GE Capital.

A provision that may be present in an adjustable-rate loan agreement which allows the loan to be changed to a fixed-interest rate loan, usually for an additional charge.

An adjustable rate mortgage (ARM) that can be converted to a fixed-rate mortgage under certain conditions.

An adjustable-rate mortgage where the borrower has the option at specified times to change into a fixed-rate mortgage.

A formal written document that transfers title to property.

A tax placed on the transfer of property in a real estate transaction.

A real-estate broker who finds a buyer for a property and initiates a negotiation for a share of the commission.

A residential project owned by a cooperative corporation where the residents own shares giving them the right to live at the residence.

A mortgage loan that enables the borrower to buy shares of a co-op.

A type of ownership where a corporation owns property (usually an apartment building) and the occupants own shares in the corporation equal to their portion of the building.

Banking services for large corporations or firms. This type of banking is designed to deal with major financial transactions that do not generally take place at a personal banking level.

When an employer transfers an employee to another city and pays moving expenses.

Repairs (or maintenance) that are requested by a buyer that must be completed before closing the sale.

A bank that holds deposits of another bank, usually a smaller bank, and provides various banking services that may not be available to the smaller bank.

An individual who signs a promissory note in conjunction with one or more additional parties. All parties are responsible for the debt repayment once the papers are signed. This means that any one party could be responsible for repaying the entire debt if any of the other parties back out or renege on the repayment.

The original price paid for an investment which is also known as the basis or tax basis. The cost basis includes any commissions or fees paid when the investment was purchased.

An expense shown on an income statement for a business that represents the cost of the inventory sold during the statement period.

An agreement or contract where a construction contractor receives a fee based on a percentage of all costs paid for labour and materials.

A step in the negotiation process where a seller rejects a purchase offer from a buyer, but then submits another offer with different terms (such as price or closing date) for the buyer to consider.

A formal and binding agreement made in a contract or property deed.

An innovative or unusual way of structuring a mortgage loan to allow the buyer to purchase the property.

Access to money or funds by a borrower on the condition of repayment to the lender over a certain period.

A company that collects and sells information about people’s credit histories. The company issues credit reports that show how individuals manage debts and make payments. The report also shows how much credit a person still has and whether or not the person has applied for a loan recently. The reports are made available to those who have a legitimate need for the information including the individual being reported upon.

A plastic card with a coded magnetic stripe that holds information and security measures for a revolving line of credit. The card holder is able to use the card to make purchases by signing a credit card slip at participating retailers or companies. Credit cards have credit limits and interest rates as determined by the card issuer. The card holder’s income and credit report will determine the allowable credit limit.

A record of an individual’s or company’s past borrowing patterns and whether or not debts were repaid on time

An insurance policy that pays off credit card debt if the borrower loses his or her job, dies or becomes disabled. The structure of protection for a revolving credit card debt is calculated each month to cover only the debt that existed at the last billing cycle.

A type of optional life insurance coverage that repays the loan if the borrower becomes disabled. The cost of the policy is often included in the principal amount of the loan.

The maximum amount of charges a cardholder may apply to a credit card account as allowed by the credit lender.

The maximum money amount available in an open-end credit arrangement such as a credit card or overdraft protection.

A judgment of a person’s ability to repay debts. The rating is often based on a person’s current and projected income and past debt payment history. Also called a credit score.

A report on past behavior regarding a borrower’s willingness and ability to repay debt in a timely manner. This report is provided to the bank by an outside agency.

An agency that prepares credit history reports. These reports are used by lenders to determine a potential borrower’s financial worthiness. The agency obtains data for these reports from a credit repository as well as from other sources.

Simply another term for a credit bureau.

The risk of loss assumed under a financial contract that a borrower or a counter-party to a loan or other credit-related contract may default or fail to fulfill its obligations.

A number, roughly between 300 and 800, that reflects a person’s credit history. Lenders calculate this number using a computer systems as part of the process for assigning rates and terms to the loans they grant.

A non-profit, cooperative financial institution owned and controlled by the people who use its services, usually a group such as employees in the same company or industry. Credit unions historically have been able to offer lower rates and fees and still operate in the black. Credit unions rely on a financial reserve to absorb unexpected losses from loan defaults or other financial setbacks, and the majority of credit unions carry federal deposit insurance that protects individual accounts up to a specified amount in the event the credit union fails.

An individual or firm to whom or which money or its equivalent is owed.

Tax credits are used to reduce the amount of the tax owed. Tax credits are more valuable than deductions because they directly reduce the amount of tax owed, rather than reducing the amount of income that is taxed./div>

A dead-end street, often with a broad circle at the end.

A problem with a property that can be fixed. Peeling paint is a curable defect whereas being located in a crime-ridden neighborhood is not.

The look or appeal of a house when viewed from the street or sidewalk.

Tax that is payable in the same or current year, such as property tax.

A contractor that builds or remodels houses based on plans submitted by the home owners.

A house that is built according to the specifications and drawings of an architect generally hired by the home owner.

The period of time between listing a property and its sale or it being taken off the market.

The withdrawal of funds from your account. In accounting, a debit is an item of debt as recorded in an account.

A service used by banks that eventually tracks account opening and closing information, cheque order history, cheque writing history, any history of collection activity on unpaid accounts, frequency of debit and ATM card use and household demographics. Under the system, when a consumer gives a cheque to a participating retailer, the individual’s account is identified by punching a code into a computer or swiping a card containing a magnetic strip or microchip through an electronic reader, which tells the retailer whether to accept or reject the transaction

A payment card that is linked directly to a customer’s bank account. Some cards require a personal identification number (PIN) while other cards require the customer’s signature. A PIN-based or direct debit card removes a purchase amount from a customer’s bank account almost immediately. A signature-based or deferred debit card has a Visa or MasterCard logo and removes the purchase amount from a customer’s bank account in two or three days.

An obligation or liability to pay or render something to another person or a firm.

The act of replacing more than one loan with a single loan, often with a lower monthly payment and a longer repayment period. Also called a consolidation loan. CanEquity has access to Canada’s best debt consolidation products, for more info about debt consolidation see our debt consolidation page.
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The issuance of bonds or other forms of debt on the public markets.

A comparison of debt and equity used to measure the livelihood of a business.

A person who has filed a petition for relief under the bankruptcy laws. 2. Anyone who owes money to a creditor.

Expenses the government allows you to subtract from your taxable income. If you have taxable income of $35,000 and deductions of $5,000, then you would figure how much tax you owe on the difference — $30,000.

A document that provides title to property and is filed with a country recorder

When a borrower fails to fulfill the obligations of a loan or lease.

An actual decline in the general level of prices in the economy

A debt or other financial obligation on which payment is overdue, such as a failure to make mortgage payments when they are due.

A mortgage loan where the borrower fails to make payments as specified in the loan agreement.

A loan that must be repaid in full, on demand.

The characteristics of human populations and population segments that influence the consumption of products and services. They include age, sex, race, family size, education level, occupation, income, and location of residence.

A person, often a child or spouse, who relies on someone else for financial support. Dependents can be claimed as exemptions which reduces the amount of your income that is taxed.

Money that is put towards a given transaction, such as a property purchase, to prove the buyer is serious about making the transaction.

The Canada Deposit Insurance Corporation insures depositors’ funds to a maximum of $60,000 per depositor, per institution, with some exceptions, in the event of the failure of a federal financial institution. Deposits in some provincial financial institutions are also covered.

A decrease or gradual loss in value because of age, natural wear, or market conditions.

1. In economics, a period of drastic decline in a national or international economy, characterized by decreasing business activity, falling prices, and unemployment. 2. An area that is sunk below its surroundings.

Financial contracts whose value is derived from the value of some underlying asset, rate or index. Derivatives are used as risk-management tools by governments and corporations to reduce exposure to risk, mainly related to fluctuations in foreign-exchange and interest rates. Derivative instruments include swaps, options, futures and forward contracts and are used by banks in two principal activities: sales/trading and asset/liability management.

A fee charged for transporting a vehicle to the dealer from the manufacturer or port of entry. This charge is passed on to the buyer without any mark-up.

Diagrams showing the location of building outlines and other improvements on a lot. However, these diagrams are not as detailed as blueprints.

Printing companies that offer cheque printing services at lower prices (than most banks) to customers who use chequing accounts. Many of these printers are also printing cheques for banks that use outside printers. Customers must supply these companies with a voided cheque or a reorder form from a current batch of cheques and a deposit slip. Names and addresses must match with information on file at the account holder’s bank.

The authorization by an account holder which allows recurring payments, such as mortgage payments or insurance premiums, to be withdrawn from their account usually on a monthly basis.

The automatic deposit of funds, such as wages, benefits or tax refunds, to a person’s bank account.

A means of authorizing payment made by governments or companies to be deposited directly into a recipient’s bank account. It is used mainly for deposits of a recurring nature such as salary, pensions and interest payments.

A means of authorizing payment made by governments or companies to be deposited directly into a recipient’s bank account. It is used mainly for deposits of a recurring nature such as salary, pensions and interest payments.

When a buyer obtains financing through an outside financial institution rather than through the dealer.

Tax that is paid directly such as income or property tax, as opposed to indirect taxes. Indirect taxes include tariffs and business taxes. See also “Indirect Tax.”

1. A statement listing defects to a property, such as the existence of lead paint or ground contamination.
2. A statement that requires the creditor to tell the debtor the annual percentage rate, finance charges, and other terms of a loan. Such statements are compulsory in most provinces.

The sum a borrower pays to a lender to decrease the interest rate for a mortgage. A point equals 1 percent of the loan amount.

A reduction in the inflation rate as a result of either government policy or a decline in economic activity.

A fee charged by some lessors at the end of a lease where the customer pays for the privilege of returning the vehicle.

The right of one party to sell real or personal property belonging to another party to pay unpaid or overdue debt.

1. Property that is in poor physical condition. 2. Property owned by an individual who is in poor financial condition.

The distribution of earnings to shareholders. In credit unions, it is the money paid to members for deposits, similar to the interest banks pay to their customers for deposits.

An inventory of documents that a lender needs to underwrite a loan, usually including pay-cheque stubs, bank statements, and tax returns.

Written undertaking by a bank on behalf of an importer authorizing an exporter to draw drafts on the bank up to a specified amount under specific terms and conditions. They are used to facilitate international trade. In the United States, these instruments are called commercial letters of credit.

Banks that are owned by Canadians. Canada has nine domestic banks, of which seven are Schedule I banks.

Banks that are owned by Canadians. Canada has nine domestic banks, of which seven are Schedule I banks.

A person’s legal or permanent residence.

A partial payment made at the time of purchase or when a loan originates with the balance to be paid later. First-time home buyers are allowed to put as little as 5% down when purchasing a property.

A periodic payment made to a construction contractor or subcontractor as work progresses. A draw is part of a construction mortgage.

On a line of credit, the draw period is the fixed time when a borrower can make withdrawals from the account. After the draw period expires, the borrower can renew the credit line or may be required to pay the outstanding balance in full, or over time.

A fungous disease that causes lumber to become brittle and crumble.

Panels of gypsum plaster wrapped in thin cardboard and attached to the house framing to create interior walls.

When a real-estate agent or broker represents both parties in a transaction.

A mortgage condition or clause that states the loan must be paid in full when the property is sold. Commonly used in reverse mortgage lending.

A building that is divided into two living units or residences, usually having separate entrances.

Some line-of-credit lenders waive underwriting costs when a credit line is opened in anticipation of future profits. If the credit line is closed early, fees are retroactively imposed by the lender.

When the buyer is granted permission from the seller to move into the property before closing.

If a leasee turns in a leased vehicle before the lease term expires, a fee is charged to terminate the lease.

A depositor forfeits interest or is charged a service fee for either withdrawing funds or closing a time deposit before the maturity date

Earned income comes from wages, salary, or business profits whereas unearned income comes from sources such as interest, dividends, rental income, and pension benefits.

Money earned through wages, salaries, tips, net earnings (if self-employed), and any other income received for work or personal services. Investment income, such as dividends and interest, is not counted as earned income. See also “Unearned Income.”

Like a deposit, the buyer gives the seller money when making a formal offer to show he or she is serious about the transaction.

A right, such as a right of way, which allows a person to use another person’s real property in a limited capacity.

An electronic version of a paper cheque. The account holder writes an e-cheque using a computer or other type of electronic device and transmits the e-cheque to the payee electronically. Like paper cheques, e-cheques are signed by the payer and endorsed by the payee. Rather than handwritten or machine-stamped signatures, however, e-cheques are affixed with digital signatures, using a combination of smart cards and digital certificates. The payee deposits the e-cheque, receives credit, and the payee’s bank clears the e-cheque to the paying bank. The paying bank validates the e-cheque and then charges the cheque writer’s account.

A way to handle business transactions such as buying or selling goods and services online or through a computer network.

The rate of change in output from the current year to the next year.

Statistics that help to determine the state of the economy. Such statistics can include the Consumer Price Index, housing starts, and unemployment rates.

An estimation of a building’s physical condition as determined by an appraiser. The actual age of a building may be more or less than the estimated effective age.

Electronic funds transfer (EFT) at the point of sale (POS). A payment option that allows consumers to make purchases by transferring funds directly from their accounts to merchant accounts.

A method used to transfer funds over the Internet as payment for goods and services. Also commonly referred to as e-cash.

A way to conduct business transactions such as buying or selling goods and services online or over a computer network.

EDI is a system used by corporations or organizations to transfer business information electronically. This system will virtually eliminate paperwork.

Income tax returns can be filed online using a personal computer with tax preparation software. The information is sent directly to Revenue Canada. If a tax payer is set up with direct deposit, refunds can be directly deposit into his or her bank account.

The transfer of money between accounts using consumer electronic systems such as automated teller machines (ATMs) or electronic bill payments.

A federal statute that requires employers with 100 or more employees to eliminate any practices in the workplace discriminating against four designated groups of people who have historically been disadvantaged in the labour market: women; people who, by reason of race or colour, are members of visible minority groups; aboriginal peoples; and persons with disabilities.

Individuals with grown children that no longer live in the same residence. For real estate purposes, empty nesters tend to down-size and purchase smaller homes when children move out.

A structure, fence, or other object that illegally extends onto another person’s property. Such encroachments might also impede the use of the property by the property owner.

A method used to ensure the privacy and security of a customer’s personal and financial information when using banking services over the Internet. Encryption scrambles the data that is being sent, so only the intended receiver can read the information. To be effective, encryption must be used by both the sender and receiver. Consumers should ensure encryption is being used before sending sensitive information over the Internet. CanEquity uses a encrypted server for all of our online applications.

A claim (as a lien) against a property or more specifically, an interest or right (as an easement or a lease) in real property that may diminish the value of the estate, but does not prevent the conveyance of the estate. Encumbrances can include mortgages, leases, easements, or restrictions.

A claim (as a lien) against a property or more specifically, an interest or right (as an easement or a lease) in real property that may diminish the value of the estate, but does not prevent the conveyance of the estate. Encumbrances can include mortgages, leases, easements, or restrictions.

The final mortgage on a property, as opposed to a construction or other interim loan.

To write one’s signature on the back of a cheque in return for the cash or credit indicated on the front of the cheque.

A person who has the skills and initiative to establish their own business. This person also manages the business and assume the financial risks associated with the venture.
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A mandatory (required by government) evaluation or assessment that must be conducted prior to construction. The assessment details the possible effects that the development could have on the environment surrounding the site.

A major credit bureau company in Canada along with Trans Union.
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The value of a property minus outstanding mortgage debt and other liens. Equity is the portion of your property that you have already paid for plus the appreciation, if any, in the value of the property since it was purchased.

Malpractice insurance that protects architects, home inspectors, and contractors from claims by clients for professional errors or faults resulting from defective judgment, deficient knowledge, or carelessness.

1. In a real estate transaction, a neutral third party holds the money in a bank account (escrow) and related documents until all conditions of the property sale are met.
2. An account in which money for property taxes and insurance is held until paid. Money is added to the account every time a mortgage payment is made.

A bank account in which money for property taxes and insurance is held until paid. Money is added to the account every time a mortgage payment is made.

A neutral third party who holds the documents and money in a real-estate transaction until all conditions of the property sale are met.

The ownership interest of an individual in real property. The total sum of all the real property and personal property owned by an individual at time of death.

To force or put out (a tenant, for example) by legal process when lease terms are violated.

A review of public records and title abstracts to determine the chain of ownership of a property.

Most leases contain limits for wear and tear on the vehicle during the lease term. The lessee must pay charges for exceeding the limits when turning in the vehicle at the end of the lease.

To give something in return for something else (such as goods or services). Making exchanges for similar or like property is a popular tax-deferral strategy.

A legal agreement giving one real-estate agent the right to sell a property for a specified period, but owners retain the right to sell their property themselves without paying the agent commission.

Government tax law allows individuals to expense certain business activities.

One of the Big Three credit bureaus, along with Equifax and Trans Union. Experian is not normally used in Canada.

Products and services produced in Canada to be sold in other countries.

A low-fee or no-free chequing account, limited to ATM, telephone, and online transactions. Express account customers are charged fees when using bank teller services.

A service contract that covers certain vehicle repairs or problems after the manufacturer’s or dealer’s warranty expires. Extended warranties are sold by vehicle manufacturers, dealers, and independent companies. With a new vehicle, the extended warranty must be purchased by the end of the first year of ownership.

The highest price that a buyer would pay for a property and the lowest price a seller is willing to accept.

An acronym for frequently asked questions. Most Web sites have an FAQ page to provide their customer’s with answers to commonly asked questions.

Outright ownership of real estate meaning the property is free of any liens or other claims against title.

When a person has outright ownership of real estate (free of any liens or other claims against title), but the use of the property is restricted.

An individual, company, or association that manages assets for another party. Fiduciaries include executors of wills and estates, trustees, receivers in bankruptcy, and those responsible for managing the finances of a minor.

A requirement that someone in a position of trust, such as a banker, real-estate agent, or title agent, must act in good faith and trust on behalf of a client.

Modifications that are made to a building or structure while on-site as opposed to planned changes that are incorporated into building plans.

A filing extension gives an individual more time to file his or her tax return, but it does not give the person more time to pay taxes.

A Federal Department that is responsible for Canada’s economic performance and the regulation of financial institutions.
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Charges that include all of the interest expected to be earned over the life of a loan, in addition to the service charges, mortgage insurance premiums, and other loan-related charges.

A fee that is paid to a person who finds a financial backer, who brings people together for business reasons, or for services rendered.

A promise made by a lender to give a borrower a loan based on certain terms and conditions at a specific time.

A primary claim made by the lender for satisfaction of outstanding debt. A first mortgage creates a first lien.

A mortgage loan that is the first or primary lien against a property.

When the government spends more money than it receives in revenue over the course of one year.

The use of government spending and taxation policies to influence the economy.

When the government receives more in revenue than it spends over the course of the year.

Assets that are not consumed or changed into money during the current accounting period. Such assets can include machinery, land, buildings, or property used to operate a business.

Fixed business costs that do not change regardless of business volume, such as property rental, insurance payments, utilities, etc.

A set payment that is made towards the balance of a loan. Fixed installments are set amounts that do not change and are typically made once a month.

A loan in which the interest rate and payments remain the same for the entire life of the loan. The interest rate and payment amounts are set at the time of loan origination.

The dates during the year when a timeshare owner is scheduled to occupy the property being shared.

Instruments that pay a fixed rate of interest for an agreed-upon length of time such as term deposits, Treasury bills, and Guaranteed Investment Certificates.

A house that is sold for less than market value or for a discounted price because it requires significant maintenance or repairs.

Personal property that becomes real property when it is attached to a structure. For example, chandeliers, built-in bookcases, cabinets, and drapery rods are all considered fixtures.

A dollar amount requested by a broker instead of being paid commission, which is usually a percentage of the sale.

1. The amount of time banks take to clear or reject (bounce) cheques for payment. 2. The amount of time at which funds are debited from the issuer’s account.

A policy that pays the homeowner for damage caused by flood waters. The policy does not cover damage from falling water, such as rain that may cause a roof to leak.

Land that is prone to inundation (being covered by water).

An enclosed porch that is built on the back or side of a dwelling and is often air-conditioned.

When a homeowner tries to sell his or her property without help from a realtor. Many homeowners attempt to sell on their own to avoid paying a high commission to a realtor.

When foreclosure on a property is delayed because the borrower has arranged to pay the amount in arrears.

The metal (coin) or paper medium of exchange that is used in other countries. For example, the US dollar is considered foreign currency to those living in Canada.

A fee charged by a credit card company for purchases made in a foreign currency.

Instruments (such as paper currency, notes, and cheques) used to make payments between individuals, organizations, or countries that use different currencies.

The value of one nation’s currency in comparision to another nation’s currency.

Something that is lost or surrendered as a penalty because of a fault, mistake, or failure to meet legal or contractual obligations.

Refers to the main types of financial institutions: banking, trust, insurance, and securities.

An contract between a company and another party in which the company gives the other party the right to use the company’s name and to sell or rent its products. This right is usually purchased for cash in addition to a royalty fee or a percentage of all sales. Selling franchise rights is a popular method for expanding a business quickly with a minimum of capital.

After a bankruptcy, the debtor is essentially given a clean slate or fresh start to rebuild his or her credit with little or no debt.

Compensation that is given to employees in addition to wages, tips, or salaries. Such benefits can include health insurance, life insurance, and pension plans.

Refers to a requirement where a potential borrower must show complete and accurate proof of income when applying for a loan. These types of loans usually offer lower interest rates than no-income or “no-doc” verification loans.

In reference to property taxes, refers to the tax rate that is applied to 100 percent of the property’s value. Also known as full cash value.

Contracts to buy something in the future at a price agreed upon in advance. Futures first developed in the agriculture commodity markets, but often involve foreign exchange, Eurodollar deposits, and government bonds.

A type of insurance offered to customers with leased vehicles. The policy pays the difference between what is owned and what the vehicle is worth if the car is stolen or destroyed.

When a set dollar amount is withheld from a person’s pay cheque and given to another party, such as a creditor or ex-spouse. Any amount garnished from a pay cheque must be included as taxable income because the full pay cheque is considered to be received by the person even though some was withheld to pay debts.

GE Capital is the new CMHC alternative in the Canadian Mortgage Market place. GE Capital like CMHC provides banks/lenders with mortgage insurance. Not to be confused with life or property insurance. In the event of default or foreclosure, GE Capital assumes responsibility of the property and reimburses the bank/lender the entire mortgage amount. This insurance is required generally when you have less than 25% equity or down payment. This insurance is paid by the property owner in advance but usually added to the mortgage amount. See also “CMHC.”
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A business or person who contracts for and takes responsibility for completing a construction project. The general contractor also hires, supervises, and pays all subcontractors and suppliers.

A monetary gift given to a mortgage applicant from his or her relative by blood or marriage. The gift cannot be money that must be re-paid and in some cases a written statement may be required by the lender as proof the funds are not a loan, but in fact a gift.

Refers to the interest-free time that lenders allow between the transaction date and the billing date if card users do not carry a balance. The standard grace period is typically between 20 and 30 days. If there is no grace period, finance charges accrue immediately at the time of purchase. Those who carry a balance on their credit cards have no grace period.

The ratio of the monthly housing payment in total (PIT — Principal, Interest and Taxes) divided by the gross monthly income. This ratio is sometimes referred to as GDS.

The total value of all the goods and services produced by the Canadian economy in a single year.

Annual income including overtime that is regular or guaranteed. The income may be from one source or multiple sources. Salary is generally the principal source, but other income may qualify if it is significant and stable.

The value of all goods and services accruing to Canadians in a given year. It equals Gross Domestic Product, plus income of Canadians from foreign production, less income from Canadian production earned by non-residents (such as interest and dividends paid to foreign lenders).

Overtime pay before taxes that is averaged over two years can be considered monthly income, but it must be over the two years or it does not count.

The difference between the sales generated by a business and the costs paid out for goods or services.

The difference between the sales generated by a business and the costs paid out for goods or services.

The rent paid by a lessee for the use of property or land only.

1. A promise or assurance, typically in writing, that advocates the quality of a product or service.
2. A formal promise or collateral agreement made by an individual to answer for the debt of another in case he or she defaults.

An investment that pays a set rate of interest over a fixed period of time.

A bathroom that does not contain a shower or a bathtub. The room simply contains a toilet and a sink

An insurance policy that provides coverage against physical damage to a property from natural disasters such as fire or other hazards. Depending on the location of a property, lenders may also require flood insurance or policies that cover windstorms (hurricanes) or earthquakes

An area equal to 100 meters by 100 meters

A process to protect buildings with historic value or significance from destruction or extensive renovation

A structure or building that is recognized by the Canadian Government and is registered as a historical structure.

A dollar amount that is withheld by the lender during construction of a home to ensure construction is satisfactory at every stage. The amount of hold-back is typically equivalent to the estimated cost to complete the construction

Refers to the length of time a capital asset is owned. Assets held for one year (12 months) or less are short-term and those owned for more than a year are considered long-term properties.

A method used to access one’s bank accounts using a telephone to transfer funds, pay bills, and make account inquiries.

The portion of a property’s value that the mortgage borrower owns outright. Essentially, it is the difference between the fair market value (selling price) of the home and what is left owing on all mortgages.

Debt secured by your home.

An open-ended loan, paid as revolving debt, that is backed by the equity in a property.

A loan that can replace or be added to the first mortgage. This type of loan is generally used when a home owner wants to make renovations to the property.

Prior to purchasing a property, the buyer should request that an inspection or examination be conducted. This inspection involves an impartial third party who examines both the visible structure and the internal systems such as heating, water, electrical, etc. The actual sale of the property often depends on the outcome of the home inspection.

A room or area within a home or other structure on a property that qualifies as a tax deduction because it is used for business purposes.

A guarantee on the workmanship or construction of a home including the functionality of some appliances. The warranty also pays for some repairs within a specified period.

An elected group that governs a subdivision or planned community. The association collects fees from the home owners to maintain common areas and enforce covenants, conditions, and restrictions set by the developer and the association.

An insurance policy that includes hazard coverage, coverage for loss or damage to property, as well as coverage for personal liability and theft.

A document accompanying a homeowner’s insurance policy that verifies the property is properly insured.

A guarantee on the workmanship or construction of a home including the functionality of some appliances. The warranty also pays for some repairs within a specified period.

The total combined income of all members within a household.

The illegal practice of discriminating against buyers or renters of dwellings on the basis of race, colour, religion, national origin, sex, family status, or disability.

Any exterior opening or opening in a structure or building that creates an illegal view of adjoining lands.

Goods and services produced in other countries and sold in Canada.

A step in the valuation process of an income property. The value is reached by estimating the annual income minus an allowance for vacancies and bad debts and then subtracting annual operating expenses, real estate taxes, and insurance premiums to obtain the net operating income. This is then converted by capitalization into a capital value.

A property that is developed or improved for the purpose of generating income. Also referred to as “non-owner occupied property” or “rental property.”

A statement that allows an individual to calculate his or her company’s pre-tax profits by subtracting total expenses from total revenues. Also referred to as a profit & loss statement or P&L.

A tax that is levied by the Federal Government and by some Provincial or Municipal Governments on the annual income of an individual or a company. The amount or percentage taxed is based on the amount of an individual’s earned and unearned income, using the government’s graduated tax scale.

A financial strategy used for tax purposes to reduce the overall tax burden on a family. Income is shifted from one family member to another who is in a lower tax bracket, so the income is taxed at the lower rate to save the family money.

A financial strategy used for tax purposes to reduce the overall tax burden on a family. Income is shifted from one family member to another who is in a lower tax bracket, so the income is taxed at the lower rate to save the family money.

1. That which cannot be undone, annulled, or made void such as an indefeasible claim.
2. Indemnity Protection or exemption from loss or damage.

A locally owned bank that is operated without being affiliated with a bank holding company. Also known as a community bank.

In real estate, an index is a table of yields or interest rates being paid on debt (such as Treasury notes or bank deposits) that is used to determine interest-rate changes.

An increase in the level of prices or a decline in purchasing power, caused by an increase in available currency and credit beyond the goods and services that are available.

An investment account registered in the name of an adult, but is in trust for a child. The trust is used to save or invest funds for a child who can access and use the funds when he or she reaches the legal age. Also known as in-trust account or “bare” trust.

Basic facilities, services, and installations needed for a community or society to function. Transportation and communication systems, hydro and electric, and public institutions such as schools and hospitals are all examples of infrastructure.

The introductory interest rate on an adjustable-rate mortgage (ARM), which typically changes at a predetermined time.

A court order that prohibits a party from taking a specific course of action.

A formal written report detailing the examination of a property’s visible structure and internal systems. The inspection and report are done prior to the completion of a real estate transaction.

A payment made towards the settlement of a debt that is typically paid at regular intervals to the creditor or lender.

An institute that provides education and training programs specific to professionals in the financial-service industry.

When there are not enough funds in a bank account to cover a pre-authorized payment, cheque, or draft made on the account. Also known as non-sufficient funds (NSF).

A title that a title insurance company is willing and able to insure.

A term used to designate the amount of insurance that can be carried on destructible portions of a property to indemnify the owner in the event of loss.

An asset such as a patent, permit, computer program, or claim that has no physical properties. It is difficult to assign values to these types of assets.

Property such as stocks, bonds, or franchises that gets value from what it represents and not from its physical nature. Business furniture and equipment are examples of tangible personal property because they do not represent something else of greater value and they serve their intended functions.

Canada’s largest shared network of Automated Teller Machines (ATMs) that enables cardholders to access their accounts from any ATM on the network regardless of which bank the cardholder does business with or which bank owns the ATM.
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A way to pay for goods and services electronically using your bank card. The merchant swipes your card, you approve the amount, select the type of bank account (usually chequing or savings), enter a Personal Identification Number (PIN), and give final approval for the funds to be immediately withdrawn from your bank account and transferred into the merchant’s account. You are given a paper record to verify the transaction.

Money that is paid by a borrower to a lender for the use of borrowed funds. Interest is usually expressed as an annual percentage.

The date one month prior to the beginning of amortization when accrued interest computed on the monies advanced becomes due.

The decimal equivalent for an interest rate on a unit amount for a time period. It is computed by interest rate divided by number of days in basic year times the number of days accrued.

A limit that is imposed upon interest rate increases and decreases for an adjustable rate loan. The cap or limit can be imposed from one adjustment period to the next or over the entire life of the loan.

The availability of funds on a daily basis to assist a developer with financing for a construction project between advances made by the lender of the construction loan.

That rate at which the current worth of all present and future investment costs equals the current worth of all present and future investment benefits.

The operation of bank branches and subsidiaries located outside Canada. This area of banking also includes the supervision of correspondent banking relationships, foreign exchange trading, and trade finance.

A world business organization that brings business people and experts together to formulate policies in such areas as banking, taxation, and the environment.

An international organization created to promote standardization around the world. ISO sets standards in many businesses and technologies, including computing, communications, engineering, and environment.

1. The amount of goods and raw materials in stock and ready for sale.
2. A detailed list of all goods and materials in stock that is compiled at regularly scheduled intervals over the operating year.

Putting money into something, such as a stock, bond, or property, usually for income or profit.

An asset such as a patent, permit, computer program, or claim that has no physical properties. It is difficult to assign values to these types of assets.

Bank operations that manage a bank’s funding position, as well as its holdings of Treasury bills, bonds, and preferred and common stock.

Income that is earned from investments such as interest, dividends, and capital gains.