BC real estate definitions (A to M)

Navigating the real estate waters in B.C. can be a tricky business, and even more so if you aren’t familiar with the many terms used in the business. Today’s blog post contains the first of two lists detailing definitions of common words and phrases you’re likely to encounter.

Amortization: How many years it will take to pay back the entire amount of a mortgage in regular instalments, via a fixed schedule.

Appraised value: The estimated value of a property.

Appreciation: A property’s increase in value over time.

Assessed value: The property value as set by the BC Assessment Authority, used for calculating property tax.

Blended payments: Mortgage payments consisting of both principal and interest components.

Buy down: A benefit for the buyer where the seller agrees to reduce the mortgage interest rate by paying the difference between the reduced rate and the market rate.

Closing costs: Additional expenses on top of the purchase price for buying/selling a property.

Conveyance: The process of transferring the title between seller and buyer.

Debt service ratio: The percentage of a borrower’s gross income that can be put towards housing costs.

Equity: The price for which a property could be sold, minus the mortgage(s) registered against it — in other words, the owner’s stake.

Gross debt service ratio: A general rule that one’s total housing costs (principal, interest, taxes, energy costs and condo fees if applicable) should not exceed more than 32 per cent of his or her gross monthly income.

High-ratio mortgage: A mortgage that exceeds 80 per cent of the appraised value or selling price, whichever is lower, and must be insured by the Canada Mortgage and Housing Corporation or a private agency.

Lien: Any legal claim against a property, filed to ensure payment of a debt.

MLS: An acronym for the Multiple Listing Service, a system for relaying information about properties for sale to realtors.

Mortgage: A contract between a borrower and lender where the property in question acts as security for payment of a debt (the mortgage).

Mortgage insurance: government or private-backed insurance that protects the lender against the borrower potentially defaulting on a high-ratio mortgage.

Next month, we tackle the rest of the alphabet covering property disclosure statements, zoning and more.