Welcome to the dynamic world of real estate, where every transaction involves a unique blend of financial decisions, legal intricacies, and a dash of strategic negotiation. Whether you’re a seasoned investor, a first-time homebuyer, or simply curious about the fascinating realm of property dealings, understanding the language of real estate is an important place to start.
Today, we’re going to break down a few key real estate terms that you will probably come across on your real estate journey.
Whether you’re thinking about getting into the real estate market or you’re simply seeking to expand your vocabulary, here are some quick explanations of some common real estate concepts.
What is chattel?
Chattle is an item that isn’t permanently affixed to or an integral part of the property. Examples include furniture, appliances, and personal belongings. Unlike fixtures, which are attached to the property and considered to be part of it, chattel is distinct in that it can be removed without causing damage or altering the structure.
Why should you know what chattel is?
Understanding the distinction between chattels and features is crucial in real estate transactions. Understanding what is included in the sale of a home and the transfer of property is important in contractual agreements between buyers and sellers.
What is a cashback mortgage?
“Cashback mortgages are a type of mortgage that has gained popularity in Canada over the past few years. With a cashback mortgage, borrowers receive a lump sum cash payment from the lender at closing. This cash payment can be used for various purposes, such as covering closing costs, making home improvements, or paying off high-interest debt.” – remax.ca
Why should you know what a cashback mortgage is?
It’s always a good idea to know all of your financial options. Learn more about the advantages and disadvantages of a cashback mortgage here.
What is mortgage insurance?
Mortgage insurance is a safeguard that lenders require home buyers to acquire if their down payment is less than 20% of the sale price of a property. It’s put in place to mitigate the risk a financial institution takes on, i.e. in the event that a borrower defaults.
Why should you know what mortgage insurance is?
If you’re saving a down payment and/or planning on purchasing a home, this is something you’ll want to keep in mind for financial-planning purposes. Mortgage insurance may be a tool to protect lenders, but it also serves benefits for borrowers:
“From the borrower’s perspective, mortgage insurance allows them to access more favourable loan terms, including lower interest rates, even with a smaller down payment. It reduces the barriers to entry into the housing market, making homeownership a viable option for individuals who might otherwise struggle to accumulate a substantial down payment.” –remax.ca
Learn more about mortgage insurance and the types of mortgage insurance here.
What are pre-payment privileges?
Pre-payment privileges in a mortgage refer to the flexibility granted to borrowers, allowing them to make additional payments or pay off the entire mortgage principal before the scheduled term ends, often helping to reduce interest costs and shorten the overall loan period. These privileges vary among mortgage agreements and can include lump-sum payments, increased regular payments, or a combination of both.
Why should you know what pre-payment privileges are?
If you’re focused on becoming debt and mortgage-free, understanding what your pre-payment privileges are can help you in your financial planning, and knowing how much you can pre-pay can help you create a strategy for paying off your mortgage quicker. Learn more.
What are gifted down payments?
A gifted down payment is when someone (typically a family member) provides the funds needed for a buyer to meet the minimum down payment required to buy a home.
Why should you know what a gifted down payment is?
Understanding the option of gifting your children a downpayment (as an early inheritance, for example) is a big decision, but it’s also a decision that can be life-changing. You can help your children get into a great home sooner, your children can start building equity, and you can enjoy spending time together in the home. Learn more about the advantages of a gifted down payment, and how to gift a down payment.
If you ever have questions, we are here to help. Give us a call today!