Home Buying Terminology

Amendments to Agreement:
An amendment to an agreement means the customer and the homebuilder agree to change a part of the original Purchase Agreement.
Amortization:
The number of years, most often 15, 20 or 25 years, it will take to repay your mortgage.
Appraisal
A process for estimating the market value of a particular property. The appraised value seldom matches the actual purchase price exactly as other factors influence price. You can get a free appraisal from one of our realtors if you're looking at purchasing another Shane home through the Guaranteed Home Trade-In Program.
Approved Lender:
A lending institution authorized by the Government of Canada through CMHC to make loans under the terms of the National Housing Act. Only Approved Lenders can negotiate mortgages which require mortgage loan insurance. Shane Homes has partnered with HSBC to offer you 1 to 1.2 points off the regular posted interest rates providing you go with HSBC for your mortgage for your new Shane home. For more information visit our Mortgage Information page.
Architectural Controls:
Each community has its own architectural controls, set by the developer, to ensure their intended look and integrity of the community is adhered to. This enhances the appearance of the community and value of your investment. For instance, homes of similar colour cannot be repeated in close proximity.
Blended Payment:
A mortgage payment that includes principal and interest. It is paid regularly during the term of the mortgage. The payment total remains the same, although the principal portion increases over time and the interest portion decreases.
Building Permit:
A certificate that must be obtained from the municipality by the property owner or contractor before a building can be erected or repaired. It must be posted in a conspicuous place until the job is completed and passed as satisfactory by a municipal building inspector.
Change Order:
When a customer wants to make a change in their new home after the purchase agreement has been signed, a change order must be filled out with the Area Manager and approved by Shane Homes. Restrictions may apply depending on the current stage of construction.
Closing Costs:
Costs, in addition to the purchase price of the home, such as legal fees, transfer fees and disbursements, that are payable on the closing date. Closing costs typically range from 1.5% - 4% of a home's selling price.
Closing Date:
The date on which the sale of a property becomes final and the new owner takes possession.
Closing Package:
A folder containing the closing statement, warranty certificate, maintenance brochures and certificates from suppliers, and more that is given to the customer on their possession walk-through.
CMHC:
Canada Mortgage and Housing Corporation. A Crown corporation that administers the National Housing Act for the federal government and encourages the improvement of housing and living conditional for all Canadians. CMHC also creates and sells mortgage loan insurance products.
Conditional Offer/Conditions of Sale:
An Offer to Purchase that is subject to specified conditions. For example, the arranging of a mortgage. There is usually a stipulated time limit within which the specified conditions must be met.
Collateral Mortgage:
A mortgage which secures a loan by way of a promissory note. The money which is borrowed can be used to buy a property or for another purpose such as a home renovation or for a vacation.
Commitment Letter/Mortgage Approval:
Written notification from the mortgage lender to the borrower that approves the advancement of a specified amount of mortgage funds under specified conditions.
Conventional Mortgage Loan:
A mortgage loan up to a maximum of 75% of the lending value of the property. Mortgage loan insurance is not required for this type of mortgage.
Deed:
A legal document which is signed by both the vendor and purchaser, transferring ownership. This document is registered as evidence of ownership.
Default:
Failure to abide by the terms of a mortgage loan agreement. A failure to make mortgage payments (defaulting on the loan) may give cause to the mortgage holder to take legal action to possess (foreclose) the mortgaged property.
Deposit:
Money placed in a trust by the purchaser when an Offer to Purchase is made. The sum is held by the real estate representative or lawyer until the sale is closed, and then paid to the vendor.
Developer:
The person or group that purchased the entire parcel of land where the subdivision is located. The developer pays for servicing this parcel of land and, in turn, sells lots to homebuilders.
Discharge of Mortgage:
A document signed by the lender and given to the borrower when a mortgage loan has been repaid in full.
Down payment:
The portion of the house price the buyer must pay up front from personal resources, before securing a mortgage. It generally ranges from 5% - 25% of the purchase price.
Easement:
A right acquired for access to or over, or for use of, another person's land for a specific purpose, such as a driveway or public utilities.
Encumbrance:
A registered claim for debt against a property, such as a mortgage.
Equity:
The difference between the price for which a home could be sold and the total debts registered against it. Equity usually increases as the outstanding principal of the mortgage is reduced through regular payments. Market values and improvements to the property also affect equity.
Foreclosure:
A legal procedure in which the lender gets ownership of the property if the borrower defaults on the mortgage loan.
Gross Debt Service Ratio (GDS):
The percentage of the borrower's gross monthly income that will be used for monthly payments of principal, interest, taxes, heating costs and half of any condominium maintenance fees.
High-ratio Mortgage:
A mortgage loan in excess of 75% of the lending value of the property. This type of mortgage must be insured - for example, by CMHC - against payment default.
Holdback:
An amount of money withheld by the lender during the progress of construction of a house to ensure that construction is satisfactory at every stage. A standard holdback amount is 10% of the total cost of the building project.
Interest:
The cost of borrowing money. Interest is usually paid to the lender in installments along with repayment of the principal loan payment.
Interest Adjustment Date (IAD):
A date from which interest on the mortgage advanced is calculated for your regular payments. This date is usually one payment period before regular mortgage payments begin. Interest due from the date your mortgage is advanced to the IAD is due on closing.
Lending Value:
The purchase price or market value of a property, whichever is less.
Loan-to-value Ratio:
The ratio of the loan to the lending value or a property expressed as a percentage. For example, the loan-to-value ratio of a loan for $90,000 on a home which costs $100,000 is 90%.
Lot:
The lot refers to the entire property or parcel where the home will be built, including city utility easements. The lot size is typically expressed in terms of square feet, linear feet or acreage. The lot size determines which home models can be built on each lot.
Lot Grading Terminology:
* Level Lot - flat lot * Level-Transitional - flat lot with a grade adjustment on one side * Back-to-Front Slope - higher grade at the rear of the lot * Back-to-Front Transitional - higher grade at the rear of the lot with a grade adjustment on one side * Front-to-Back Slope - higher grade at the front of the lot * Front-to-Back Transitional - higher grade at the front of the lot with a grade adjustment on one side * Walkout Lot - Low enough grade at the rear of the lot so you are able to walk directly out of your lower level into your back yard. It makes a two storey home feel like a three store home. * Walkout Transitional - A walk-out lot with a grade adjustment on one side
Maturity Date:
The last day of the term of the mortgage agreement. On this day the mortgage loan must be either paid in full or the agreement renewed.
Mortgage:
A mortgage is a loan, provided by a bank or mortgage company, that helps you build a home. Like all loans, you pay it off by making payments over a period of time. Your payments go toward paying off the principal (the amount of money you borrowed) and the interest (the cost of borrowing the money).
Mortgage Life Insurance:
The insurance guarantees that if you die your mortgage will be paid in full.
Mortgage Loan Insurance:
If you have a high-ratio mortgage (more than 75% of the purchase price), your lender will require mortgage loan insurance - available from CMHC or a private insurer. The insurance premium will cost between 0.5% and 3.75% of the amount of the mortgage (additional charges may apply).
Mortgage Payment:
A regularly scheduled payment that is blended to include both principal and interest. You can use our mortgage calculator to find out what your mortgage payments would be based on various interest rates.
Mortgage Pre-Approval:
This helps you in your search for a new home by giving you a clear idea of what you can afford. This includes the amount of money you can realistically borrow to buy a home and the amount of your payments. You can receive a mortgage pre-approval from any bank or mortgage company, which is held for approximately 90 days from the time of application. This is also beneficial as it holds the mortgage rate for you. If the mortgage rate goes up before you sign a purchase agreement to purchase a home, you will receive the lower rate at the time of application for the pre-approval, and if the interest rates go down you will receive the lower rate.
Net Worth:
Your total financial worth, calculated by subtracting your total liabilities from your total assets.
Offer to Purchase:
A written contract setting out the terms under which the buyer agrees to buy. If accepted by the seller, it forms a legally binding contract subject to the terms and conditions stated in the document.
Phase:
Developments are typically created in phases, or large portions of an entire community. Phase one opens first, followed by the second and third phases, and so on. The number of phases in each community depends upon how large the community is and what time frame the developer uses to create the community.
Plot Plan:
The plot plan shows how the house is proposed to be situated on the lot.
P.I.T.:
Principal, interest and taxes - payments due on a regular basis under the terms of the mortgage agreement. Generally, payments are made monthly and include one-twelfth of the estimated annual municipal and school taxes. Since these taxes change from year to year, this section of the mortgage will change accordingly.
P.I.T.H.:
Principal, interest, taxes and heating - costs used to calculate the Gross Debt Service ratio (GDS).
Principal:
The amount of money actually borrowed.
Real Property Report (R.P.R.):
A Real Property Report is a legal document that illustrates in detail the location of all relevant, visible public and private improvements relative to property boundaries. It takes the form of a plan or illustration of the various physical features of the property (i.e. deck, fence, garage), including a written statement detailing the surveyors opinions or concerns. It can be relied upon by the buyer, the seller, the lender and the municipality as an accurate representation of the improvements on your property.
Realtor:
A real estate representative who is a member of an organization of persons engaged in the business of buying and selling real estate, such as the Calgary Real Estate Board.
Refinance:
To pay off a mortgage or other registered encumbrance and arrange for a new mortgage, sometimes with a different lender.
Request for a Lot Hold:
To reserve a lot for a short period of time, the customer can provide Shane Homes with a $1,000 deposit. In exchange, Shane Homes will hold the lot for the customer and will notify the customer if another party expresses an interest in it.
Review Plans/Check Set:
The check set includes a set of drawings and a proposed plot plan. You will review this with your Shane Homes Area Manager to ensure the plans incorporate all of your desired changes.
Second Mortgage:
An additional mortgage on a property that already has a mortgage.
Spec Home or Home for Quick Possession:
Is a home that is pre-built before a buyer of the home is found. Shane Homes has an inventory of spec homes under construction, at various stages, in numerous communities throughout the city. The advantage of a spec home is that the customer does not have to wait the complete duration of construction - the possession date may be immediate up to five months away. The disadvantage is if the home is at a far enough stage during the construction process then the colors and options cannot be altered.
Standard Specifications:
This term refers to all of the regular items that comprise a new home. Shane Homes has two levels of standard specifications - style series and serenity series. Each model has a specific standard specification. When you view one of the floorplan pages within our website you will see a link for the standard specifications for that model.
Term:
The length of time during which a mortgagor (borrower) pays a specific interest rate on the mortgage loan. The entire mortgage principal is usually not paid off at the end of the term because the amortization period is normally longer than the term.
Title:
A freehold title gives the holder full and exclusive ownership of land and buildings for an indefinite period of time. In condominium ownership, land and common elements of buildings are owned collectively by all unit owners, while the residential units belong exclusively to the individual owners. A leasehold title gives the holder a right to use and occupy land and buildings for a defined period of time.
Total Debt Service Ratio (TDS):
The percentage of gross monthly income require to cover all monthly payments for housing and all other debts, such as car payments.
Vendor Take Back Mortgage:
Mortgage financing arranged between the seller of the property and the buyer. The title is transferred to the buyer. Often this type of loan is a second mortgage which the seller is willing to arrange at below market rates to ensure the buyer can purchase the house. Most of these arrangements are not renewable or transferable to the next owner of the house.
Walk-through:
A walk-through is an inspection of your new home prior to completion. Shane Homes does three walk-throughs with the customer throughout the construction process of their new home.