Module 4 & half of module 5 Flashcards
patent defect
readily visible upon reasonable inspection
defect that does not be disclosed by the seller
patent defect
latent defect
not readily observable
Water damage, bug infestation
latent defect
Poses serious risk
material latent defect
Qualifying a buyer
assessing their financial readiness
Buyer would face HST obligations if the property
was used for a commercial purpose or is a fully reno’ed home OR purchasing the new home/fees associated with moving
high family formation rate may predict a
seller’s market
Stable employment rates
balanced market
When interests rates are high
no one wnats to sell bc of the risk of ending up in greater debt
When interests rates are low
mortgages are more affordable - people want to buy
Non-resident sellers
must pay capital gains tax and provide proof w a clearance certificate
Adjustments are costs that are
allocated bw a seller and buyer on closing
Most common adjustments
outstanding utility costs and property tax
Property inspectors look for information on
the physical structure and mechanical systems (AC, heating)
Land transfer tax is assessed when
a deed is registered
First time home buyers may qualify for
a rebate of some or all of the land transfer tax
Comisson from a buyer is most commonly paid to
the listing brokerage by the sellers lawyer
Provinical land transfer tax is based on
property value
Equitable mortgage is used when
a borrower requires additional funding
Equitable mortgages do not disturb
existing first mortgage
Amortization refers to
the decrease in a loan due to scheduled payments
Amortization periods range from
5 to 30 yrs
Amortization periods for residential mortgages
15 to 25 yrs
Partially Amortization mortgage
low monthly payments with a ballon payment at maturity date
When interest rates are falling the term for a mortgage is
short
When interest rates are stable or increasing the term for a mortgage is
long, such as 5 yrs to be assured of the lower or stable interest rate
Loan to value
ratio of a loan to the value of a property
Higher loan to value means
the more risk the lender has
Fixed rate mortgage
interest does not change throughout the term of the loan
Variable rate rate mortgage
Interest rate is adjusted to reflect market conditions
Interest plus specified principal borrower repays
a fixed principal amount and periodically asked to pay interest
blended/
amortized mortgages
equal payments (mix of principal and interest based) at specific intervals
Most common type of payment plan for residential mortgages
Blended amortized
Second implied covenant
Mortgagor promises that the land is held in fee simple (land is owned in good title)
third implied covenant
Mortgagor promises that for a leasehold, the lease is valid and up to date
third implied covenant reimbursment
will occur for every non-payment/
performance of other convenants under the lease
Right to quiet possession
Mortgagor has the right to occupy the property uninterrupted unless in default
Pre payment
mortgagor has agreed to make payments according to a specified schedule (do not have to pay more than already specified)
Postponement
An existing mortgagee may agree to postpone the priority of their mortgage in favour of a prior motgage being replaced/created
Mortgage default
failure to fulfill a promise/obligation
Judicial sale
Disposition of a mortgaged property by court action
Credit unions are adminstered by the
financial services comission of ontario
Equity takeout
Renewing mortgage and increasing outstanding principal bc property value has increased
purchase plus improvements
buyer applies to cover closing costs and improvements that will be made following closing
Prime market
focused on borrowers who have high credit scores
sub prime markets
lender who entertain higher risk levels involving borrowers
Secondary market
trading of existing mortgages
Interest rates as based on
supply and demand
when demand for mortgages increases and supply is constant
interest rates rise
abundant supply for homes means (interest rates)
lower rates
Longer the amortization mean
lower the payment and more interest paid
Biweekly mortgage payment calculations
payment factor x loan value (in # of thousands)
