A-B C-D E-F G-H I-J K-L M-N 0-P Q-R S-T U-V W-Z Amortization: The number of years it takes to repay the entire amount of a mortgage. Appraisal: An estimate of a property's market value, used by lenders in determining the amount of the mortgage. Appreciation: The increase of a property's value over time. Assessment: The value of a property set by the local municipality, for the purposes of calculating property tax.
Assessment Roll: An annual list of the current value assessments for all properties, in a municipality, which includes the names of the property owners or tenants and their address. Assumable Mortgage: A mortgage held on a property by the seller that can be taken over by the buyer, who then accepts responsibility for making the mortgage payments. Blended Mortgage: A combination of two mortgages, one with a higher interest rate than the other, to create a new mortgage with an interest rate somewhere between the two original rates. Blended Mortgage Payments: Equal or regular mortgage payments, consisting of both a principal and an interest component. With each successive payment, the amount applied to interest decreases and the amount applied to the principal increases, although the total payment doesn't change. (Exception - see variable rate mortgages.) Bridge Financing: Money borrowed against a homeowner's equity in a property, usually for a short term, to help finance the purchase of another property or make improvements to a property being sold. Buy-down: When the seller reduces the interest rate on a mortgage by paying the difference between the reduced rate and market rate directly to the lender or to the purchaser, in one lump sum or monthly instalments. Capping and Clawback: Capping refers to a municipality’s option to limit, or cap, the tax increases on commercial, industrial and multi-residential properties. The limit on tax decreases, in order to fund capping, is known as a clawback. Closing: The real estate transaction's completion, when the parties involved agree that all legal and financial obligations have been met, and the deed to the property is transferred from the seller to the buyer. Conventional Mortgage: A first mortgage issued for up to 75 per cent of the property's appraised value or purchase price, whichever is lower. Counteroffer: One party's written response to the other party's offer during purchase negotiations between buyer and seller. Cost Approach: One of the approaches used to value property. The cost approach is based on the theory that a person would not pay more to purchase a property than it would cost to buy the land and replace the existing buildings or improvements. Current Value: The price a property might reasonable be expected to sell for if sold by a willing seller to a willing buyer after appropriate time and exposure on an open market. For property assessment purposes, current value and assessed value are the same thing. Debt Service Ratio: The percentage of a borrower's gross income that can be used for housing costs, including mortgage payment and taxes (and condominium fees, when applicable). Deed: A legal document that conveys (transfers) ownership of a property to the buyer. Easement: A legal right to use or cross (right-of-way) another person's land for limited purposes. A common example is a utility company's right to run wires or lay pipe across a property. Encroachment: An intrusion onto an adjoining property -- such as a neighbor's fence, storage shed or overhanging roof line that partially (or even fully) intrudes onto your property. Equity: The difference between the price for which a property can be sold and the mortgage(s) on the property. Equity is the owner's "stake" in a property. Exempt Property: Property which is assessed, but not taxed. Generally, properties which are exempt from property taxes provide services for the public good, such as schools, churches and hospitals. Other charities and philanthropic organizations mentioned in the Assessement Act may be given exempt status if certain criteria are met. Foreclosure: A legal process by which the lender takes possession and ownership of a property when the borrower defaults on the mortgage obligations. Funding Formula: Set by legislation, the funding formula is used to determine MPAC’s fee to municipalities for assessment services. The formula is designed to strike a balance between the number of properties and the value of assessment in each municipality. High-Ratio Mortgage: A mortgage for more than 75 per cent of a property's appraised value or purchase price. Improvements(tax purposes): Buildings or other structures and attachments to land that are intended to remain attached (e.g. house, garage, shed). Land: As defined in the Assessment Act , "land", "real property", "real estate" include:
• land covered with water,
• all trees and underwood growing upon land,
• all mines, minerals, gas, oil, salt quarries and fossils in and under land,
• all buildings or any part of a building, all structures, machinery and fixtures erected or placed upon, in, over, under or affixed to land,
• all structures and fixtures erected or placed upon, in, over, under or affixed to a highway, land or other public communication or water, but not the rolling stock of a transportation system. Land Transfer Tax: Payment to the provincial government for transferring property from the seller to the buyer. Lien: Any legal claim against a property, filed to ensure payment of a debt. Linear Property: Property that generally extends in lines and has distribution networks or other facilities that extend across municipal boundaries (e.g. railway rights-of-way and power utility corridors). Mass Appraisal: The process of valuing a group of properties as of a given date, using common data, mathematical models and statistical tests. The use of mass appraisal allows MPAC to value a large number of properties in a short period of time. Mortgagee: The lender. Mortgage Insurance: Government-backed or private-backed insurance protecting the lender against the borrower's default on high-ratio (and other types) of mortgages. Mortgagor: The borrower. Multiple Listing Service (MLS): A system for relaying information to REALTORS® about properties for sale. Municipal Enumeration: The process of collecting information in a municipality for the purpose of preparing preliminary voters' lists for municipal and school board elections, lists of potential jurors and the Ontario Population Report. MPAC carries out an enumeration every three years in the same year as municipal elections. Omitted Assessement: An assessment which has not been recorded on the assessment roll. When an omitted assessment is added to the assessment roll, property taxes can be collected for the current year and, if applicable, for any part or all of the previous two years. Ontario Fair Assessment System: The new assessment system created under Bill 106, the Fair Municipal Finance Act, 1997 , to make property assessment and the calculation of property taxes fair, consistent and understandable. Under OFAS, property assessment values across the province were updated to their current value, using the same valuation date; seven standard property classes were created; the business occupancy tax was eliminated; local governments were given the authority to establish different tax rates for different classes of property; and the appeals process was simplified. Prepayment Privilege: A mortgage feature that allows the borrower to prepay a portion or all of the principal balance with or without penalty. This privilege is frequently restricted to specific amounts and times. Principal: The mortgage amount initially borrowed, or the portion still owing on the mortgage. Interest is calculated on the principal amount. Property Classification: Categorization of a property or a portion of a property according to its use, each category representing a different tax class. There are seven major classes of property (residential, multi-residential, commercial, industrial, pipe line, farm, managed forests) and six specialty classes (new multi-residential, office building, shopping centre, parking lots and vacant land property, large industrial and professional sports facilities). Regulated Assessments: Assessments that are determined by the activity or production capability or by a legislated rate, rather than by the value of the property itself. Regulated properties include pipe lines, rights-of-way, power utility corridors and power generating stations. Sales Comparison Approach: One of the approaches used to value property. This approach is based on the theory that the current value of a property is directly related to the sale prices of similar properties. Supplementary Assessment: An assessment made during a taxation year for an addition, renovation or construction. When a supplementary assessment is added to the assessment roll, additional property taxes can be collected for that portion of the current tax year that the supplementary addresses. A supplementary assessment can also be issued when there has been a change in the tax class of a property. The classification may occur during the taxation year, or the preceding November or December. Where the class change results in a higher tax rate, municipalities cannot collect additional taxes for those two months but only for the current tax year. Status Certificate: A written statement of a condominium unit's current financial and legal status. Valuation Date: A fixed point in time on which current assessment values are based. This date is set by the provincial government. The valuation date in Ontario is January 1st. Variable-Rate Mortgage: A mortgage for which payments are fixed, but whose interest rate changes in relationship to fluctuating market interest rates. If market rates go up, a larger portion of the payment goes to interest. If rates go down, a larger portion of the payment is applied to the principal. Vendor-Take-Back Mortgage: When sellers use their equity in a property to provide some or all of the mortgage financing in order to sell the property. Zoning Regulations: Strict guidelines set by municipal governments regulating how a property may or may not be used. |