Glossary · Payotte — 45 terms

The Canadian real estate glossary, without the jargon

45 terms every buyer or seller runs into — from the stress test to latent defects — defined in plain language, each linked to the dossier that goes deeper. Vocabulary is half the bargaining power: whoever understands the words negotiates better.

Definitions linked to the Payotte dossiers (current, sourced figures) · updated July 30, 2026

In brief

This glossary defines the 45 essential terms of buying, selling and financing real estate in Canada, in four families: financing and mortgage (from the policy rate to bridge loans), buying and selling (from the purchase offer to the discharge), reading the market (from benchmark prices to months of inventory), and how professionals are regulated (who issues which licence). Every definition stands on its own and links to the Payotte dossier that develops it with current figures.

Financing and mortgage

Policy rate #: The Bank of Canada's target for the overnight rate — the lever that drives every other rate in the country. When it moves, banks' prime rate usually follows within days, and variable mortgages with it. Live figures and decision calendar: our policy-rate dossier.
Prime rate #: The reference rate banks offer their best customers, adjusted in step with the policy rate. Variable mortgages are priced against it (e.g. "prime − 0.9%"): when prime moves, your payment or your amortization moves.
Stress test #: The federal rule that qualifies you not at your actual rate, but at the higher of 5.25% and your rate + 2 points. You PAY your contract rate, but you must PROVE you would survive the test rate — this is what caps most households' borrowing capacity. Full math: our affordability pillar.
GDS (gross debt service) #: The ratio of housing costs (payment + taxes + heating) to gross household income — capped at 39% for an insured loan. It is the first of the two guardrails of mortgage qualification, alongside TDS.
TDS (total debt service) #: The ratio of ALL monthly debts (housing + car + cards + credit lines) to gross income — capped around 44%. It is the one that bites when you carry other payments: every $100 of monthly debt removes roughly $15,000 of borrowing capacity.
Amortization #: The total planned time to repay the loan in full — 25 years standard, 30 years to lower the payment (freely available on uninsured loans; reserved for first-time buyers and new builds on insured loans, since December 2024). Longer = lower payment but distinctly more total interest: the effect, city by city.
Term #: The length of your CONTRACT with the lender (often 5 years), not to be confused with amortization (the loan's total length). At term's end, the loan reprices at current rates — the "renewal wall" that has surprised so many households: our renewal dossier.
Down payment #: The money you put in at purchase: minimum 5% on the first $500,000, 10% between $500,000 and $1.5M, 20% from $1.5M up. Below 20%, mortgage insurance is mandatory and its premium is added to the loan. Full schedule and calculator: our down-payment pillar.
Insured / uninsured loan #: Insured = down payment under 20%: the insurer (CMHC, Sagen, Canada Guaranty) protects the LENDER against your default, and YOU pay the premium. Uninsured ("conventional") = 20%+ down, no premium — but sometimes different rules (30-year amortization freely offered, for instance).
Pre-approval #: A lender's assessment of how much it would lend you, BEFORE you shop — usually with a rate held for 90 to 120 days. Not a firm promise (the property must qualify too), but it is what makes your offer credible to a seller.
Mortgage penalty #: What breaking your mortgage before term's end costs: three months' interest, or the interest-rate differential (IRD) — almost always the higher of the two, and the IRD can reach tens of thousands on a fixed rate. Both formulas and how to avoid it: our penalty pillar.
IRD (interest rate differential) #: The penalty formula charging the lender's "loss" between your rate and the one it would relend at today — often computed from the POSTED rate, which artificially inflates it. Reason #1 why two mortgages at the same rate don't cost the same to break.
Trigger rate #: On a fixed-payment variable mortgage, the rate at which your payment no longer even covers interest: principal stops shrinking and the lender requires an adjustment. The real risk of variable, more than the rate itself: fixed vs variable, compared.
Refinancing #: Re-borrowing against your home's value — up to 80% of market value, minus the loan balance — to consolidate debts, renovate or invest. Distinct from a HELOC, which is continuously reusable: our refinancing & HELOC dossier.
HELOC (home equity line of credit) #: A credit line secured by the home, at prime + a spread, where you pay interest only on what you use. Flexible but dangerous for the undisciplined: unlike a mortgage, it does not pay itself off.
B lender (alternative) #: Lenders who say yes when the bank says no — hard-to-document self-employed income, bruised credit — in exchange for a higher rate and setup fees. A TRANSITION, not a destination: the exit plan back to an A rate belongs in the file from day one. What a B lender's "yes" really costs.
Bridge loan #: The temporary financing that lets you buy the next home before the sale of the current one closes — generally conditional on a FIRM sale, over weeks to a few months. How it works, and the alternatives.
HBP and FHSA #: The two first-home tax shelters: the HBP (withdraw up to $60,000 from your RRSP, repayable over 15 years) and the FHSA (contribute up to $40,000 deductible, tax-free withdrawals, no repayment). They STACK for the same purchase: the optimal order.

Buying and selling

Commission (real estate) #: Agents' compensation on a sale, paid by the seller and generally split between the listing and buyer's agents — on average ~2% per agent in Canada, ~4% total (2026 study on verified transactions). NO schedule is imposed: everything is negotiable. The real numbers by province.
Brokerage contract #: The written mandate binding the seller (or buyer) to their agent: duration, commission, included services, exclusivity. Everything is negotiated BEFORE signing — after, you are committed for the stated duration.
Purchase offer #: The legal document where the buyer proposes price and conditions (inspection, financing, dates). Once accepted, it BINDS both parties — walking away outside the stated conditions invites lawsuits. Conditions aren't paperwork: they are your exits.
Pre-purchase inspection #: A visual examination of the property before buying — the best few-hundred-dollar insurance in the process. Licensing varies by province (mandatory in BC and Alberta; Quebec's RBQ certificate becomes mandatory October 1, 2027). Price, scope and licences by province.
Certificate of location #: The land surveyor's document describing the property, its boundaries and irregularities (encroachments, easements, non-conformities). The seller must provide a CURRENT one — an old certificate that predates a pool or shed added since is a classic source of notary delays. (Quebec practice; other provinces use surveys and title insurance.)
Legal warranty #: Quebec's default Civil Code protection: the seller guarantees both title AND the property's quality (no latent defects). Selling "without legal warranty, at the buyer's risk" appears in estate and repossession sales — and should be reflected in the price.
Latent defect #: A serious defect that existed BEFORE the sale, was not apparent to a careful examination, and was unknown to the buyer — all four conditions must hold together. A visible or disclosed problem is not a latent defect; that is why the inspection and the seller's declarations matter so much.
Welcome tax (transfer duties) #: The municipal tax paid by the BUYER after transfer, computed in brackets like income tax (0.5% / 1% / 1.5% on Quebec's 2026 base schedule, municipal surcharge possible above $500,000). It arrives AFTER closing and is paid in cash. The real amount, city by city.
Closing costs #: Everything added to the price at purchase: land transfer tax, lawyer or notary, adjustments (taxes the seller prepaid), title insurance, inspection. Budget roughly 1.5 to 4% of the price, payable in cash. The breakdown by province.
Adjustments #: The pro-rata split, at closing date, of what the seller prepaid: municipal and school taxes, heating oil, condo fees. The lawyer computes them to the day — one reason the final amount always differs slightly from the agreed price.
Discharge #: The document that officially erases the seller's mortgage from the land register once their loan is repaid from the sale proceeds. Without a registered discharge, the buyer inherits a still-encumbered property — one of the closing lawyer's three vital checks. The lawyer's role at closing.
FSBO (for sale by owner) #: Selling yourself, without an agent — typically through a flat-fee platform. The saved commission has to pay for the package, your time, the paperwork and the execution risk: the trade-off in numbers, no side taken.
Multiple offers (bidding war) #: When several buyers submit offers on the same property — the mechanics of seller's markets. Sellers often set an offer deadline; buyers sometimes waive conditions to stand out, a risk to weigh coldly (waiving the inspection can cost dearly).

Reading the market

Benchmark price (HPI) #: The price of a "typical" home in the area, computed by the MLS® Home Price Index — the most stable measure, insensitive to whether more mansions or more studios happened to sell this month. It is the figure our price dossiers prefer when the board publishes it.
Median vs average price #: The median = the middle sale (half above, half below); the average = the sum divided by the count. Two luxury sales can inflate the average without a single ordinary home changing price — hence the preference for the median or the benchmark.
Days on market (DOM) #: The average number of days between listing and sale — the market-speed thermometer, from 9 days (Winnipeg) to 56 (Edmonton) in our latest data. Caution: each board measures it its own way; compare a city with itself over time. City by city.
Months of inventory #: How long it would take to sell every listed property at the current pace — THE bargaining-power barometer. Standard board convention: under 4 months = seller's market, 4 to 6 = balanced, over 6 = buyer's market.
Seller's / buyer's market #: Seller's: supply is short, homes move fast, multiple offers likely. Buyer's: supply overflows, you negotiate, you keep your conditions. The verdict reads from months of inventory — and it varies enormously between cities at the same moment.
CMA (census metropolitan area) #: Statistics Canada's boundary around a major city and its ring (the "Montreal CMA" includes Laval, Longueuil, Terrebonne…). Many statistics — including CMHC rents — exist only at that scale: always check a figure's geographic scope before citing it.
Comparables #: Recent sales of similar properties in the same area, used to establish fair value — the base method of agents and appraisers alike. Three good comparables beat ten loose ones; choosing the comparables IS the appraisal.
Municipal assessment #: The value on the roll used to compute your TAXES — not a market price: it lags (multi-year rolls) and adjusts through a comparative factor. Using it to set an asking price is the classic mistake: why the roll is not a price.

Regulation and professionals

OACIQ #: Quebec's self-regulatory body for real estate brokerage — the regulator of brokers and agencies. Its public register exists to verify A licence (number, status, discipline): ask your broker for their number and check it yourself. Who regulates what, province by province.
AMF (Autorité des marchés financiers) #: Quebec's regulator of MORTGAGE brokering (among other sectors): every mortgage broker must hold an AMF certificate, verifiable in the Authority's public register. Outside Quebec, that role belongs to FSRA (Ontario), RECA (Alberta), BCFSA (BC)…
RBQ certificate (inspectors) #: The first STATE credential for Quebec home inspectors: issued by the Régie du bâtiment, it becomes MANDATORY for transaction inspections on October 1, 2027 (REIBH regulation). An inspector already certified today holds a verifiable head start — association memberships (AIBQ, APCHQ) remain memberships, not licences.
Notary vs real estate lawyer #: In Quebec, the NOTARY receives the deed of sale and the mortgage and registers the rights — the "real estate lawyer" role doesn't exist there. Everywhere else in Canada, a lawyer (or a notary public in BC) closes the transaction.
Certified appraiser #: The professional whose opinion of value carries legal weight — an OEAQ member in Quebec, AIC-designated (AACI/CRA) elsewhere. Required by lenders, estates and disputes; not to be confused with an agent's "free evaluation", which is a marketing opinion.
Regulator / order vs association #: A state regulator or professional order (OACIQ, AMF, law societies, AIC provinces vary) issues a MANDATORY licence and can revoke it; an association (AIBQ, InterNACHI, CAHPI) sells a VOLUNTARY membership with standards. Both are verifiable — but they don't weigh the same: an honest profile says which one it shows.

When a word isn't enough, talk to a verified professional

The glossary explains; an expert applies. Payotte names a single verified professional per sector and trade — agent, mortgage broker, inspector, notary/lawyer, appraiser — selected on public data.

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