Real Estate Terms Every Buyer and Seller Should Know
The world of real estate can feel like a foreign language to first-time buyers and even seasoned sellers. From legalities to financing, there’s a lot to keep straight. But understanding the key terms can give you confidence, save time, and help you make smarter decisions.
Here’s a concise guide from A to Z on the most important real estate terminology you’re likely to encounter in Ontario:
A–C
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Amortization: The number of years it will take to fully pay off your mortgage. Most Ontario mortgages are amortized over 25 years.
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Appraisal: An expert estimate of a property’s market value, used by lenders to determine mortgage amounts.
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Assessment: The value assigned to a property by the local municipality for tax purposes.
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Assumable Mortgage: A seller’s mortgage that can be taken over by the buyer, often making a property more attractive.
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Blended Mortgage Payments: Regular payments that combine both principal and interest.
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Broker: A licensed real estate professional authorized to facilitate the sale, lease, or exchange of a property.
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Bridge Financing: Short-term financing using a homeowner’s equity to purchase another property or make improvements.
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Buy-down: When a seller reduces the interest rate on a mortgage to make a property more attractive to buyers.
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Closed Mortgage: A mortgage that cannot be prepaid or renegotiated without penalties.
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Conventional Mortgage: A mortgage for up to 75% of the property’s appraised value or purchase price.
D–G
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Debt Service Ratio: The percentage of your gross income allowed for housing costs, used to calculate affordability.
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Easement: Legal permission to use or cross another person’s land for a limited purpose.
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Encroachment: When a structure, like a fence or roof, intrudes onto a neighbouring property.
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First Mortgage: The primary mortgage registered on a property; any additional loans are secondary.
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High-Ratio Mortgage: A mortgage exceeding 75% of the property’s appraised value.
L–M
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Listing Agreement: A contract authorizing a REALTOR® to sell or lease a property.
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Mortgage: A loan secured by a property to guarantee repayment.
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Mortgage Term: The length of time a lender will provide mortgage funds before renegotiation is required.
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Multiple Listing Service (MLS®): A system for REALTORS® to share property listings.
O–R
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Open Mortgage: A mortgage that can be prepaid or renegotiated without penalty.
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Partially Open Mortgage: Allows prepayment of a portion of the mortgage principal at certain times.
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REALTOR®: A trademarked name for licensed real estate professionals who are members of a local real estate board and the Canadian Real Estate Association.
T–V
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Transfer Taxes: Fees paid to the provincial government when transferring property ownership.
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Vendor Take-Back Mortgage: When a seller finances part or all of the buyer’s mortgage using their equity.
Z
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Zoning Regulations: Municipal rules that dictate how a property may or may not be used.
Mastering the Language of Real Estate
Knowing these terms will help you navigate the buying or selling process with confidence. Real estate isn’t just about homes—it’s about smart decisions, financial planning, and protecting your investment.
Don’t go it alone—our MovingSimcoe.com team is here to guide you through every step of the process. Schedule a consultation today and get the expertise you need to succeed.
